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Study finds typical LIer earns less than half what it takes to buy a home

Emily and Sean Marek outside their Huntington home

Emily and Sean Marek outside their Huntington home on Thursday. Credit: Barry Sloan

The typical Long Islander earns less than half what it takes to buy a home here, and the situation is worsening as home prices rise while wages stagnate, a new report shows.

In Nassau County, a buyer must earn about $145,500 to afford a home selling for the median price of $490,000, California-based real estate information company Attom Data Solutions found in a report released Thursday. That’s more than twice the average yearly wage of $60,489 in Nassau, the company reported.

In Suffolk County, home buyers require an income of nearly $116,000 to make monthly payments on a house priced at the median $365,000, Attom reported. That’s roughly double Suffolk’s average wage of about $57,800.

The mismatch between wages and home prices “creates an untenable situation, particularly for millennials,” said Mark Lesko, executive dean of the Wilbur F. Breslin Center for Real Estate Studies at Hofstra University. “Ultimately, that demographic is going to have to leave Long Island. You just can’t afford to live here.”

The typical Nassau resident would need to spend more than 67 percent of his or her paycheck to buy a median-priced home, and the typical Suffolk resident would need to set aside 56 percent, Attom's report found. 

By contrast, in the North Carolina county that includes Charlotte, it takes only 26 percent of typical wages to afford a home, less than the national average of 29 percent, Attom reported. In Charlotte, the median home price is $215,000 and the average wage is about $64,000.

Attom's analysis includes the monthly cost of a mortgage, property taxes, home insurance and mortgage insurance. It assumes home buyers can afford to spend no more than 28 percent of their income on housing.

In Attom's study of 446 counties across the country, Nassau ranked 24th least affordable, and Suffolk came in 44th. In 68 percent of the counties included in Attom’s report, median home prices were not affordable for average wage earners.

On Long Island, “it’s the combination of home prices that have been rising faster than wages, consistently, during this economic recovery and housing recovery,” said Daren Blomquist, senior vice president with Attom. “That’s what’s leaving home buyers, or prospective home buyers, in a tough position on Long Island.”

The region’s high property taxes, he said, “add fuel to the affordability fire.”

The problem is likely to get worse if interest rates keep climbing, he added. This week, the average mortgage interest rate was 4.44 percent, up 0.3 percentage points from a year earlier, mortgage giant Freddie Mac reported.

“The saving grace in this market is low interest rates, and that appears to be going away, so that’s not very good news for the future of affordability,” Blomquist said.

What’s more, annual property taxes often exceed $10,000, and many median-priced homes require updates or repairs, said Amy Girimonti, an associate broker with Prime Properties Long Island in Huntington. Buyers “are feeling that they both need to work, at least starting off, in order to make the payments and afford the taxes,” Girimonti said.

That was the case for Sean and Emily Marek, who bought their 92-year-old, three-bedroom Colonial in Huntington last year.

When they first started home shopping, their goal was to keep their monthly payments under one-third of their combined income, said Sean, 30, a physical therapist. 

Despite their efforts, he said, “we’re a little above that, and that’s with two incomes.”

With Long Island's high housing costs, "it all adds up very quickly,” said Emily, 31, a kindergarten teacher. “You definitely need two incomes to make everything work.” The report used weekly wage data from the federal Bureau of Labor Statistics, as well as figures from Freddie Mac and sales records to compare home prices with incomes for 446 counties across the country, assuming buyers made down payments of 3 percent and paid typical mortgage rates.

The county in the nation where home prices and incomes were most out of whack was Brooklyn, where the typical wage earner brings home about $45,000 and the median sales price was $740,000 in the first months of 2018, Attom reported.

Manhattan, Queens and San Francisco also ranked among the least affordable counties in the nation, with typical wage earners needing to spend 85 percent or more of their income to afford a median-priced home.

On Long Island the gap between home values and wages is widening, with housing prices rising by 7 percent over the past year while wages remained flat in Suffolk and ticked up by 1 percent in Nassau, Attom reported.

Many home buyers are couples who must both work full time to pay their mortgage and property taxes, said Jamie Gorman, a real estate agent with Plainview-based Charles Rutenberg Realty.

High home prices and taxes are “putting a lot of pressure on people,” Gorman said. “If their budget is based on two salaries, then there’s going to be no flexibility on that . . . they have to keep their jobs, or they need to settle for less.”

Nassau County median home price: $490,000

Nassau County average annual wage: $60,489

Suffolk County median home price: $365,000

Suffolk County average annual wage: $57,811

Source: Attom Data Solutions 

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