With the preliminary May jobs report coming out yesterday, we saw average hourly earnings up 0.3% which was in line with the expectations. Compared to last year, hourly earnings were 4.3%, down from 4.4% in 2022.
As home prices continue to rise, it is important that we continue to see growth in wages in order for people to be able to afford homes.
To combat the affordability issues across the country, we are starting to see lenders develop new loan products. I have seen a 40 years conventional loan recently, as well as a 30 year 1% down conventional loan with a qualification score of only 640.
If you recall, we saw the same kind of activity happening with lenders in 2005 and 2006 before the housing crisis. I am certainly NOT predicting a housing crisis. I am saying that lenders will have to be careful to not overleverage themselves, especially with the new laws requiring banks to keep more assets on hand to prevent further banking collapses as we saw earlier this year.