The Federal Reserve Bank of San Francisco CEO John Williams said employment levels are tied to housing prices — and a steep downturn in real estate is likely to diminish job opportunities in construction, home maintenance, plumbing and other real estate-related trades. However, this holds little influence on the improving performance of individual state economies.

“But, what is fascinating, and perhaps surprising, is this: The close relationship between the fall in home prices and state economic activity has largely disappeared during the recovery,” Williams said while speaking at the SPUR Business Breakfast Series. “There’s almost no systematic relationship between employment growth and home price declines.”

Since the overlap did not hold perfectly, Williams believes the economy is facing issues that are national in scope and beyond the downturn in real estate.

Earlier this week, Williams described the negative effect falling home prices and a continually slow real estate market had on employment numbers across the nation.

States with the highest post-recession job losses are the same ones that experienced steep home price declines in the past four years, suggesting a corollary between the two economic indicators, Federal Reserve Bank of San Francisco CEO John Williams said Wednesday. 

Williams made that assertion while speaking at the University of San Diego School of Business Administration.

Williams revealed two charts (featured below) that show states with the steepest home price losses — Nevada, Arizona, California and Florida — also saw their employment figures fall by 8% or more. 

Meanwhile, states with softer job losses fared the best in terms of home prices during the recession. 

North Dakota functioned as a type of outlier. The state was somewhat shielded from steep price declines that racked other areas, fared better on the employment front and even saw home price increases.

Some of the factors holding the economy back include a collapse in household finances as well as the possibility that job openings exist, but employees who lost jobs in the recession are not trained for some of the positions that remain open.

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