A bit of background:
The U.S. housing bubble was mainly a Floridan, Arizonan, and Californian phenomenon. The U.S. state most heavily affected by the housing bubble was Florida, though most of the home equity losses took place in California due to its population. In the early 2000s, Las Vegas benefited from a “wealth effect” caused by rising home prices in California and was deeply hurt by both the fall in home prices and the Great Recession, much more so than the rest of the country. In the mid-2000s, Detroit was deeply hurt by manufacturing job losses caused by outside competition during the World Boom, had its real housing prices peak in 2003, and was hit by the Great Recession about as hard as the rest of the United States, being hit harder after 9/15 than before. Louisiana, Texas, and Alabama were not hit as hard by housing price falls as the rest of the U.S. Canada had a housing boom, but no housing bust to speak of.
The U.S. Great Recession can be divided into two periods, readily separated by the ever-memorable date of 9/15/08, roughly midway through the recession chronologically. Before this date, when, as you remember, Lehman Brothers failed, there was no consensus in the mainstream media that the U.S. was in recession. On that date, the consensus finally appeared. I was there, so I remember this. Indeed, the first nine months of the recession of 2008 didn’t suggest a recession much more severe than the recessions of 1990, 2001, or 1970, which were fairly mild, raising unemployment by roughly two and a half percentage points, never more than three. Instead, the Great Recession ended up raising unemployment by 5.6 percentage points, worse than any other U.S. recession since the Great Depression (so far). This was, as Scott Sumner says, due to falling NGDP. Indeed, nominal dollar auto sales were fairly stable during the Great Recession’s inflationary first half, while they collapsed during its deflationary second half. Falling NGDP was why the dollar price of gasoline rapidly fell, but did not boost real auto sales, or any kind of other indicator of economic confidence. Previously, the second-worst U.S. recession since the Great Depression had been the recession of 1973, which was an inflationary one not due to any notable demand shock. The second half of the Great Recession was not a pure demand shock, as August 1937-June 1938 in the U.S. was, but it was much more due to aggregate demand than any other U.S. recession since the 1940s. The fall in NGDP was due to the Fed not doing enough Quantitative Easing, and, more importantly, not targeting the forecast (i.e., imagining they’re powerless). Obviously, had the Federal Reserve not gone ahead with unprecedented Quantitative Easing, the recession would have been much worse. The roots of the sudden NGDP crash lay in a banking system-wide credit crunch resulting from sudden loan losses resulting in tightening credit standards, as well as an increase in demand for money due to recessionary expectations (which the Federal Reserve did not do anywhere near enough to alleviate).
The thing to understand is that before 9/15, unemployment was rising faster in the areas hit by the housing crash than it was outside the areas hit by the housing crash. After 9/15, unemployment rose fast in all areas of the country (though for some reason Alabama was hit harder than the rest of the country in both phases of the recession):
The Civilian Unemployment Rate is the U.S. Unemployment rate.
As you can see, Canada, due to having a separate banking system and monetary policy and not having a significant housing price fall, was not hammered by the recession much at all, but also had a much slower recovery. Las Vegas was hammered by both the housing price fall and the broader recession, as tourism to the city dried up. Florida and California were affected by the recession no more than the rest of the country after 9/15, but were significantly more affected by the housing price fall in 2007 than the rest of the U.S. Texas was less affected by the housing price fall than the rest of the country, due to it having almost no housing bubble, but was also less affected by 9/15. Why Alabama was so disproportionately affected by both parts of the recession remains something of a mystery. It had a late housing bubble, but did not have significantly higher housing equity losses than the rest of the country in proportion to its population.