Housing is on its second leg of a bull run after the first bull run crashed and burned in 2007/2008. The growth in home prices has outstripped average hourly income since 1999.
Here is a chart comparing home price growth YoY and average hourly wage growth YoY. Notice that is has stabilized to 2x (home prices growing twice as fast as average wage growth).
The ratio of home price growth to average hourly wage growth peaked in July 2004 at 10.52.
Of course, the highest rates of home price growth occurred during the early-to-mid 2000s after The Fed’s rapid rate cuts related to the 2001 recession.
Unfortunately, average hourly wage growth fell after 2001 as home prices were accelerating.
Despite 10 years at near-zero Fed Funds target rates and $4.4 TRILLION in Fed asset purchases (and an almost doubling of the M2 money stock since 2007), all The Fed has to show for it is the worst wage recovery after a recession in modern history. And elevated asset prices.
All that Fed stimulus and home prices growing at 2x wage growth.
Lest we forget, household consumer purchasing power has fallen by more than a half since 1988.