Housing Market on Long Island Still Depressed

Today I heard some disturbing news about the state of the housing market on Long Island. There is now a 31 month supply of homes on the market; over 35,000 homes for sale. In the last 6 months a little over 1000 homes were sold. Now that prices are declining, there are more interested buyers, but declining values will put more of those new home buyers of the last 2 or 3 years underwater where the amount owed on their mortgage is greater than the market price of the home. It may also put many of those who tapped their home equity based on peak market values underwater as well.

While there may be glimmers of hope in some pockets of this turbulent economy, the reality is that homeowners in Long Island and downstate New York are in trouble. Sadly, due to the high cost of living in this region, those homeowners who are laid off, underemployed, or whose wages have been reduced for any reason barely stand a chance of survival for very long unless they have ample savings. Many of those home buyers of the last 2 or 3 years were financially stretched when they purchased the home in the first place. But, they feared missing out on the opportunity to own a home when prices started to skyrocket putting any chance of home ownership out of reach for much of the middle class. Now, that home is a financial burden in itself.

Unfortunately, the financial safety nets that cheap money provided such as the ability to tap home equity if one needed extra funds or the ability to pick up another credit card on the fly, if times got a little tight, are gone. What will the homeowner turn to when he or she needs to make ends meet? We are facing a lot more foreclosures on the Island and a lot more desperate homeowners in New York.

Meanwhile, Albany is behaving as usual, jacking up the budget by $10,000,000,000 over last year, making underhanded funding deals with the MTA, granting all unions basically a stay of financial execution and a myriad of other deplorable financial conduct in a state that ranks in the top 3 for the highest taxes and cost of living nationwide and where taxes associated with Wall Street account for 20% of the state budget and we know how well they are doing. Long Island suffers from the same pigheadedness that New Yorkers do, too big, too important, too powerful to fail.

What to do? Though Long Island is an aging suburb, it has the benefit of a desirable location and has plenty of options that it refuses to accept. Long Island could minimize its downward spiral simply by implementing a few of the recommendations proffered by the Island's best economic minds, Chief Economist Pearl Kamer, Martin Cantor, Director, Long Island Economic and Social Policy Institute at Dowling College and Irwin Kellner, Distinguished Scholar of Economics, and the Rauch Foundation's excellent economic overview, Long Island Index. Taken together they have researched, reviewed and recommended viable solutions that will help Long Island regain its financial footing.

Bold action is always recommended, even desired, but rarely ever implemented. So it may very well be that we will watch, defiantly, as Long Island and even New York State continue their downward spirals while everyone else is finding their way out.