The Correlation between Unemployment and Foreclosures By Charles Carter

RISMEDIA, July 16, 2010--(MCT)--QUESTION: I've noticed the number of residential foreclosures is still high. What is the relationship between states' unemployment rates and states' rates of foreclosures in the U.S.? Are the two connected? -Jeff Tyler, Palo Alto, Calif.

ANSWER: We can use a statistic called Pearson's product-moment correlation coefficient, or Pearson's r, to see if the two are related.

Using the newest data available - states' foreclosure filings and states' unemployment rates for May - the result is 0.56. That means there's a high positive correlation. Pearson's r ranges between 1.0, which means a perfect correlation, and -1.0, a perfect negative correlation. No correlation would mean a Pearson's r of 0. Daily Real Estate News Article continued . . .