Young adults on Long Island face wages that have dropped by 22 percent and home prices that have skyrocketed by 150 percent since 1970, a new study shows.
This combination of financial blows makes it difficult for millennials to strike out on their own, costing the local economy hundreds of millions of dollars in forgone spending, the study concluded.
Long Islanders age 25 to 34 earned a median salary of $40,000 in 2016, compared with $51,458 in 1970, after adjusting for inflation, an analysis of the most recent census figures by the Long Island Association shows.
Over roughly the same period, the median home price soared from less than $180,000 in 1970 to nearly $450,000 in 2017, taking inflation into account, the study found.
Young adults are now far less likely than their 1970 counterparts to move out of their parents’ homes, the study found. Fewer than 21 percent of Long Island’s young adults owned their own homes in 2016, compared with 68 percent in 1970. More than 44 percent lived with at least one parent, compared with less than 10 percent in 1970.
The share of young Long Islanders who were heads of their own households – as renters or homeowners – declined from 86 percent to 36.5 percent from 1970 to 2016.
The difficulty young adults face in living independently on Long Island costs the local economy more than $700 million a year in spending on goods and services such as real estate brokers and attorneys, home repairs, appliances and furniture, the study concluded.
“The creation of new households is critical to a growing economy,” said Kevin Law, chief executive of the Long Island Association, the region’s largest business group. The study, released Thursday, is the 12th by the group’s Research Institute.
“We need to make sure that we are not putting any roadblocks in the way of millennials who are trying to get their own place,” Law said.
Law said it would help if local municipalities would allow larger rental buildings near certain downtown train stations so developers can provide more affordably priced units.
Many young Long Islanders say it’s a challenge to afford the region’s high home prices and property taxes.
“The millennials very much want to buy a home and live on Long Island,” said Joe Moshé, broker/owner of Plainview-based Charles Rutenberg Realty. But due to the Island’s high cost of land and construction, “the housing that’s being built is high-end housing," he said. "You’re not finding people building homes for $350,000 to $400,000.”
Those 30 and younger typically are not yet thinking about buying a home or settling down, he said. “A lot of people don’t want to have families until they raise enough money to be able to afford a home,” he said.
The Long Island Association’s study found that in 2016, fewer than 37 percent of young adults were married, down from 83 percent in 1970. Even among young married couples, one in five lived with at least one parent in 2016, up from 1.9 percent in 1970.
Some young adults get help from parents in amassing a down payment, Moshé said. Others seek out loans from the Federal Housing Administration, which come with higher costs but allow down payments of as little as 3.5 percent, he said.
“We show them the market and we hope that they can either afford a little more or will settle for a little less,” he said.
Gino Marino spent two years looking for a home to buy in Dix Hills, where he grew up.
He bought a five-bedroom expanded ranch on one acre for $565,000 in May, less than two weeks before he turned 35. He’s gutting and renovating the home, which had been abandoned and had a leaky roof, burst pipes, broken windows and a moldy interior. “I knew it was something I could redo and get some equity in it,” said Marino, an associate broker with Signature Premier Properties in Dix Hills.
Long Island’s young adults typically need two incomes to afford a home, and they often can only save up a down payment of 5 to 10 percent, which makes it hard to compete with those offering 20 to 30 percent down payments, Marino said.
“A lot of my millennial buyers realize they don’t want to rent anymore, they don’t want to throw away money,” he said. But for young adults, “9 times out of 10, what they want in a home isn’t what they can actually afford.”