HOUSING AFFORDABILITY
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Why is this important?
As housing costs represent a growing share of the household budget on Long Island, housing affordability becomes an issue for everyone including homeowners, renters, those entering the labor market, middle-income families and employees. From one perspective, rising housing costs are a sign that Long Island continues to be a place where people desire to live. However, higher housing costs deplete the quality of life on Long Island for the many families struggling with rent and house payments and make it difficult for employers to recruit and retain workers. Over time, the limited supply of lower cost housing can change the cultural, demographic and economic character of the region. Increasing housing cost burdens make it harder for longtime residents to stay, and for the adult children of residents to start their families in the region.
How are we doing?
Housing prices have skyrocketed across the U.S. creating a growing disparity between housing costs and income. The share of households who spend more than 35% of their income on housing on Long Island increased from 27% in 2000 to 38% in 2006. The share of American households with such a high housing cost burden was only 28% in 2006. Suffolk County in particular experienced a sharp jump, with the number of households in this category increasing from 35% to 40%. In Nassau, where the housing cost burden has been slightly higher for most of the past six years, the share increased from 36% to 37%.
Home Sale Prices
Sales prices leveled off in the latter half of 2006 and the first half of 2007. Median sales prices rose only 2% from 2005 to 2006, increasing from $430,000 to $440,000, following several consecutive years with double-digit increases. From 2005 to 2006, the share of homes sold for more than $500,000 declined from 43% to 35%. Those selling for less than $375,000 increased from 18% to 27%. Sales prices in the first half of 2007 are similar to those in 2006.
Even with this moderation, the escalation in prices since 2000 remains striking. Median prices more than doubled in a six year period. Homes that sold for less than $250,000 declined from 62% to less than 5% by the beginning of 2007. Homes sold for over $500,000 increased from 10% to 36% over the same time period.
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Median Rents
While the increase in sales prices moderated in 2006, rents continued to rise at the rate of about 6% per year. Rents increased by 3.2% in Nassau and 8.7% in Suffolk between 2005 and 2006, reversing the pattern of the previous year when rents grew more in Nassau. Since 2000, rents have increased by 39% Island-wide, with comparable increases in Nassau and Suffolk. In 2000, 55% of rentals cost less than $1000 a month; in 2006, that share was cut in half, to 23%. By contrast, homes and apartments renting for more than $1,500 more than tripled, from 11% in 2000 to 38% in 2006.