If Long Island lives and dies by its housing market, it would seem at first look that we’d be thriving right now.
Start with median home prices at insanely high levels, about $650,000 in Nassau County and just over $500,000 in Suffolk. Add the incredibly quick pace of home sales, thanks mostly to an extraordinary lack of inventory. And don’t forget about mortgage rates, still low enough to allow demand to remain high.
It seems like the perfect mix for the region’s benefit — a hot market with none of the worrisome qualities that have gotten us into trouble before, and with little end in sight.
"It’s not a bubble," a Brookings Institution housing researcher said recently about the national market, a sentiment echoed locally, too.
Perhaps not. But those are words we’ve heard before — and we’d be wise to remember that we’ve been wrong before. In 2004, as I was writing about the housing market's apparent strength, one area real estate agent told me, "It's an indestructible housing economy in our market."
Four years later, that housing economy turned out to be not so indestructible.
The warning signs exist now, too. With the end of the COVID-related foreclosure moratorium, signs are emerging regarding the extent of a potential crisis among existing Long Island homeowners, as about 14,500 of them are at least three months behind on paying their mortgages.
Meanwhile, the Island’s newest homebuyers, who are paying top dollar right now, are expected to keep reaching into the mortgage banks' pockets, borrowing large sums to afford those rising prices. The national total lent last year, $1.61 trillion, topped even 2005 levels — before the bubble burst, that so-called "indestructible" market. While fixed-rate mortgages put many homebuyers in better shape, they’re also facing increasing costs on everything thanks to rising inflation and wages that aren’t keeping up.
Perhaps we’ve learned our lessons. Perhaps this time, buyers won’t get into trouble. But even the hottest of markets is a house of cards when it’s resting on the combination of rising home prices, low inventory, and big loans. It may not burst, it may not collapse, but its foundation is flimsy and uncertain.
Expanding the region's housing stock would help firm up that foundation, but Long Island’s well-known and long-held limits in zoning and infrastructure and thinking tend to hold the area back. Would-be buyers and renters might benefit from new state proposals attempting to encourage new zoning and thinking. But even those efforts, featuring jargony phrases like accessory dwelling units and transit-oriented development, likely don’t go far enough.
Could a tricky housing market — one that might not be a bubble but is certainly not indestructible — be the difference-maker in shifting how Long Islanders think about new housing and other development, about changes to zoning and the need for affordability?
Sure, but it won’t be easy. As long as sellers of existing homes are finding buyers, the very residents municipalities would count on to support such new housing construction won’t see the need for it — because they’ve somehow found their way in without it.
But with an additional push — state policy that goes further in combining the right restrictions and incentives, as states like California and Massachusetts have done, or a tipping point in prices — that, too, could change. Eventually, residents might welcome more accessory apartments, additional housing near train stations, or new construction at old strip malls. Eventually, the jargon might become the norm.
If it doesn’t, eventually, the indestructible will become destructible.
Columnist Randi F. Marshall's opinions are her own.