Long Island, N.Y., Sees Many Priced Out of Housing Market
In 2000, 60 percent of homes sold on Long Island, N.Y., could be classified as “affordable housing” for families earning up to $100,000 a year, using the old rule that buyers should spend no more than 2.5 times their income on places to live.
Last year, according to the New York Times, just 2 percent of the houses sold on Long Island were in that range for families with such earnings, which make up more than 60 percent of Long Island households.
The staggering drop over six years, according to the Long Island Index, an annual study of economic and social trends, is the result of low income growth and soaring housing costs, among other factors that have made the area increasingly unaffordable as the median debt-to-income ratio soars.
“It took our breath away, that the change has been so dramatic in such a short period of time,” said Ann Golob, director of the study, which is scheduled for official release Friday. “The image of our region as a wealthy suburb is far from reality for many Long Islanders who are struggling to keep up with high and rising costs.”
Although home prices have retreated in recent months, they remain at near-record levels, a bonanza for many homeowners, at least on paper. Those already living here are insulated from the entry barrier of high prices first-time new home buyers would face.
As the nation’s first post-World War II suburbs, Long Island flourished for decades as a middle-income alternative to New York City and is now home to nearly three million people.
Factors contributing to the exorbitant New York mortgage costs in the area include the loss of higher-paying jobs and growth of lower-paying ones. A decade ago, wages here exceeded the national average by 16 percent; that has shrunk to 5 percent, and average pay has stagnated since 2003.
“Now our income advantage is disappearing, pushing some families near the breaking point,” the report says.
In the report’s survey of 808 residents, 58 percent complained of a tough time paying their monthly home loan payments and other bills, while 54 percent said they were thinking of abandoning Long Island for lower-cost areas. Still, 82 percent called Long Island a good or excellent place to live, but only 48 percent say it’s on the right track.
“Taken as a whole, Long Island’s story has been a success story,” says the report. “But our continued success is now in doubt. We face significant problems, which yearly grow worse.”
In a competitive economy, the report warned, the Long Island real estate market will lose out to other areas unless business and affordable housing expand and taxes decline.
“In an era of easy mobility, a region defers change at its peril,” it said.
The 2.5-times-income formula for prices is often ignored in places like the New York metro area, California and South Florida, where many are forced to spend disproportionately for shelter and shortchange other parts of their budget compared to other parts of the country.
The report did not adjust housing prices for changing mortgage rates, which were about two percentage points higher in 2000. But Golob noted that home owners who bought then were able to cut carrying costs via home mortgage refinancing as rates fell.
Beyond home prices and mortgage rates, an additional factor in the cost of housing is property taxes. They are notoriously high on Long Island and have jumped faster than inflation, the report said.
Many residents are under financial stress because of scant income growth, up by 2 percent on average since 2000. Meanwhile, they are squeezed by the rising costs of property taxes, heating, electricity and gasoline. Even families with incomes above $110,000 report difficulty in paying bills.
“People love their hometown of Long Island — they just can’t afford it any more,” the Nassau County executive, Thomas R. Suozzi, said in response to the report. “We remodeled the Levitt houses, and now we have to remodel the suburban paradigm.”