The housing market is so down in the dumps, it has managed to distort the economic grounding of a whole state: California was ranked third highest in the nation when it comes to jobless rate. But looking closely at the California economy, one will notice how most of its unemployment problems are rooted in real estate. If only the market is faring better, then California would not be in the top three jobless states.

According to a report released by the Center for the Continuing Study of the California Economy, California’s jobless rate in August was at 12.4%. This is the third highest in the United States. At numbers one and two are Nevada at 14.4% and Michigan at 13.1%.

When the Center for the Continuing Study of the California Economy looked at the job losses, it found out that the primary reason behind the job losses is an above-average concentration of jobs connected to the housing market. Whereas the whole country declined only by 25% in construction spending, California dipped by 60% during the recession. The same trend was seen in the construction workforce: there was only 25% loss nationwide but 33% for the state of California. There were also disproportionate high job losses for other real estate related jobs like furniture outlets and mortgage brokerages.

A proof that it is only the housing market that’s pulling down the Californian economy is that the sate is faring well in other industries. Notably in the manufacturing industry, California has seen fewer job losses as compared to the national average.

Center for the Continuing Study of the California Economy head Steven Levy explains, “Unlike in the aerospace or dot.com recessions, the state’s economic base did not experience any losses that are likely to persist over time.”

The sad fact is that it will take years before the housing market recovers its grounding. Associated General Contractors reveals that of the 337 major metropolitan areas, only 56 have more construction workers compared to last year. And in San Diego County, there is a 2% annual decline in construction jobs.

In the conclusion of the recession in early 1990s, California took seven years before prices recovered and construction rebounded. Hope is not all gone, though, Levy says. Housing is bound to eventually recover as the state targets 400,000 to 500,000 more residents in the next ten years.