NEW YORK, Jan. 3, 2013 /PRNewswire-iReach/ -- Even if you've got a job, there are plenty of Americans who don't.  As of December 2012, the U.S. unemployment rate sat at 7.7% -- which means that more than 12 million people filed for unemployment benefits. 

So, how does all of this affect the nation's real estate market?

As you might have guessed, it has a huge impact! Part of the effect is cyclical.  When the unemployment rate is high, millions of people can't afford to buy houses.  Since people aren't buying, builders aren't out building new houses.  As a result, more and more construction workers are out of a job -- which adds to the unemployment rate. Cycles aside, high unemployment has another major effect -- it drags down the demand.  Like you learned in high school economics, the higher the demand is for something, the more you can sell it for.  Since people aren't fighting over houses these days, sales prices are lower.  In fact, some sellers are so desperate to get rid of their homes that they are simply taking whatever offers come along.

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When homeowners see this type of decrease in demand, they become hesitant to put their own houses on the market.  After all, they don't want to sell their house for a big loss!  So, inventories (or, the number of homes for sale at any given time) drop.  Right now, we're seeing decreases in inventory all over the country.

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There's another thing to worry about when unemployment is high -- foreclosures.  The longer people are out of work, the higher the odds are that they won't be able to afford their mortgage payments.

If you want to see a real-time example of the relationship between unemployment and foreclosures, take a look at Fresno.  At last check, the city had an unemployment rate of 14.7%.  As of mid-August, there were only 885 residential properties for sale here -- 161 of which were short sales (oftentimes, a last ditch effort for people trying to avoid foreclosure) and another 110 were foreclosures.

Surprisingly, the median sales price in Fresno is $146,500 -- a slight increase from this time last year.  However, many homeowners here are afraid to put their homes on the market, for fear that the market is going to be flooded with foreclosures.  They have good reason to be afraid, too, since RealtyTrac says that only 15% of bank-owned Fresno houses are on the market right now.  If more of those houses get put up for sale, it could drag down selling prices all over town.

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Want a less depressing example of how unemployment affects real estate? Take a look at the  Phoenix market. The unemployment rate here is 7.5% -- still high, but lower than the national average.  Since mid-2011, sale prices in Phoenix have gone up 20%. But even in cities like Phoenix, unemployment can still take a toll on the real estate market.  After all, countless studies have showed that higher unemployment rates lead to higher crime rates.  And, the higher your area's crime rate is, the lower your property value is going to be.  So, even if you're one of those gainfully-employed Phoenix homeowners (or a homeowner anywhere else), your property value could be lower than you think.

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There's also a psychological effect to think about. The longer unemployment stays high, the less confident people feel.  Even if they have jobs today, they're worried about getting pink slips tomorrow.  As a result, the odds of them committing to a 15-year or 30-year mortgage are low.  They're not going to take that kind of risk. What's the bottom line? Even if your own employment status is stable, the unemployment problem around you can lead to issues if you're thinking about buying or selling a home.

james paffrath RealtyPin.com, 1-(866) 960-8649, james@realtypin.com

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SOURCE RealtyPin