Long Island Housing Market

Long Island’s economy came a long way in the 1990s. Decades of dependence on the defense industry finally came to an end. Thanks to government outreach and incentives, businesses connected to construction, finance, tourism, wholesale and retail trade, professional services and health care moved in. Between 1998 and 2000, jobs were being created at a rate of 30,000 a year. 

Then something went wrong. Fewer than 8,400 new jobs were added annually between 2003 and 2005. And while the jobs created between 1996 and 2000 paid an average of $40,977 a year, those created between 2000 and 2004 paid only $23,995 – far too little to support a household with even two wage earners. Since 2002, Long Island has trailed New York City and the state in job creation. 

What happened? 

Partly it’s that Long Island is a mature suburb with little land left for future development under current zoning laws. This slows population growth and, with it, job creation. 

We know also that at least some of the job growth of the 1980s and 1990s reflected a catching up of jobs to prior population growth. Businesses came to Long Island to be closer to customers. Banks then opened branches, department stores migrated to newly built shopping malls and other services followed. That catch-up is now over. 

We also know that Long Island’s job boom was connected to the technology bubble that drove a prosperous national economy in the late 1990s. The computerization of offices, stores and manufacturing plants generated jobs for computer programmers and systems analysts, instructors in computer science, Web site designers and computer repair and maintenance personnel. That bubble burst after 2001. 

But this is only part of the story. 

Anecdotal evidence suggests that Long Island’s job-creation machine has broken down largely because housing costs and property taxes are completely out of line with what households and businesses can afford to pay. People are forced to leave the Island, and this drives away businesses when they can no longer find the workers they need. 

In March, the median sales price of a home was $470,000 in Nassau and $396,800 in Suffolk. The standard 10 percent down payment is beyond many buyers. Assuming that buyers obtain a mortgage equal to three times their gross household income, Nassau home buyers would need an annual income of $140,000 and Suffolk buyers $120,000 to purchase a median-priced home. But, according the Census Bureau, only about 95,000 Nassau households (22 percent of the total) and 110,000 Suffolk households (23 percent) made that much money as of 2004. 

If they were buying today, most Long Islanders could not afford to purchase the home in which they live. For those who are not yet homeowners, the prices seem increasingly out of reach. Escalating property taxes make the problem even worse. The tale of the young couple forced to refinance their mortgage to pay their property taxes is becoming more commonplace. 

Young professionals simply cannot hope to own a home on Long Island at today’s entry-level wages: $37,220 for a social worker, $29,720 for a computer support specialist and $35,550 for a credit analyst. Not surprisingly, according to the U.S. Census Bureau, the number of Long Islanders between ages 25 and 44 declined by almost 66,000 between 2000 and 2004. 

How can we expect to create jobs when we are losing the heart of our workforce? Jobs for engineers, technicians, nurses and other skilled workers are going begging, in part because young people are starting their careers elsewhere. 

What’s the solution? 

The property tax problem is difficult to resolve. Schools account for the lion’s share of those costs, and the Island suffers under a highly inequitable state school aid formula. Although Nassau and Suffolk educate 17 percent of the state’s students, they receive only about 12.8 percent of all state aid to education. And an educational dollar spent on Long Island buys only 60 percent as much as the same dollar spent upstate because Long Island’s living costs are so much higher. 

Any solution to the aid inequities will have to come from Albany, where Long Island is only one of many voting blocs. This region’s elected officials need to do all they can to change that system, while school districts act locally to cut costs by trimming waste and consolidating some functions. 

When it comes to housing, however, Long Island has the power alone to change zoning laws to encourage building of places that will be affordable and attractive to young people. 

Why not redevelop some of the older downtowns and “brownfields” to feature higher-density housing that incorporates rental units along with office, retail, educational and cultural centers? 

Since the downtowns often have access to public transportation, this would likely reduce road congestion, help conserve energy, create an urban environment that is attractive to young people and still preserve lower-density neighborhoods elsewhere on Long Island. 

At the same time, new low-density housing developments will need to include some homes that are affordable to young people starting their careers. This the counties could require by law or negotiate in return for various amenities. 

Most important, any form of housing that is built must be affordable. The U.S. Department of Housing and Urban Development says that housing is affordable if it absorbs no more than 30 percent of household income. This is the guideline that next-generation housing on Long Island should meet. 

County, town and village governments on Long Island have begun to display the political will to put next-generation housing in place, thereby stemming the brain drain that is contributing to today’s anemic job growth. This is exemplified by Suffolk’s vision for a mixed-used community on county-owned land in Yaphank and Nassau’s vision for the Nassau Hub. 

However, if NIMBY-ism is to be defeated – and there is still a good deal of opposition to higher-density development from people who fear that the fundamental character of the Island will change for the worse – the general public must be brought on board. Everyone must be persuaded that affordable housing and a thriving economy with healthy job growth are inextricably linked.