Unless your head is in the sand as a homeowner or a tenant, you have read or experienced the increases that have taken place in the cost of ownership. Even as a tenant you have seen increases over the years that either made you wake up and do whatever was necessary to leave your rental to buy or you were fortunate enough to earn, save and have the money to become an owner.
However, so many have decided over the years to leave New York state (especially over the last year from the Covid-19 pandemic) for more safer and reasonable locales where either rentals are much much less or where you could purchase at a price that was more manageable and didn’t stress your pocketbook out or leave you up at night figuring out how to afford your home. It’s called having a life and living a life more comfortably than what you previously had. It makes total sense to me.
Some of us are more fortunate than others as to where we can stay and be around our children and grandchildren. If it weren’t for this insidious virus, I am quite sure our real estate market would not have been as robust from all the city dwellers’ exodus, which surely added to the insane and artificial increase in prices in 2020. Because of this it has caused the normal cycle in the adjustment of prices to temporarily be put on hold while the inevitable just might be down the road, staring us in the face.
It’s been a real two-edged sword, the sad passing of more than 554,000 people on the one side but on the positive side for all those who bought or own a home. The writing has been on the wall for years and those leaving to look for greener, more affordable pastures will not stop, unless the word affordability comes into the picture. I am a bit unsure as to how this pressing issue can be solved.
I am going to segue a bit for a reason. I remember when Tom DiNapoli came up my driveway when he was an assemblyman and we got into a discussion about politics. There was an opening on the Independent line for Town of North Hempstead supervisor back in the late ’80s. So I thought, why not, I was always open to challenges, but little did I know about politics. So I ran on the Independent line for town supervisor (my wife was not very happy, as I had very young children at the time as well as a business). I ran against John Kiernan, Ben Zwirn and a right to lifer whose name escapes me. I spoke on Channel 12 when Melba Toliver interviewed all of us as well as in front of a group of citizens in a church in Manhasset. I realized at the time that Independents just don’t win elections but I thought the experience would be helpful.
The one thing I will never forget and the point of this story was discussing the cost of living in Nassau County and about the brain drain that was slowly happening and would continue to happen as the price of real estate kept increasing in bubble territory and then crashed!
Anyway the main reason for the story was 34 years ago things were changing for those who wanted to stay on Long Island but really couldn’t afford it. So now today it’s déjà vue and I believe much worse than back then when I bought a home in Kings Point for $407,000! Then I sold it for $695,000 to the still current homeowners and I was only living there for 18 months. Now that same home is probably $1.8 million to $2.2 million. The point I am trying to put forth is that somewhere over the next few years as current demand subsides due to even higher prices or increases in interest rates, our inventory will increase substantially as more people put their homes for sale to get the top price. I am not sure how much more interest rates will increase, which will cause a substantial increase in U.S. debt payments and will cause a major rift to our economic foundation and who knows what else.
The brain drain as well as those families and individuals trying to have a more affordable existence will continue to shift to other states, reducing our workforce. If things don’t adjust, I fear that our market will be comprised of and only be affordable to just those owners and tenants at the higher end of the income spectrum. Lastly, the final nail in the coffin is starting with the higher overdose of taxes for new construction and the beginning of the five-year phase-in of our new real estate taxes for existing homes. I hope and pray for everyone’s sake that some cutting edge ideas leading to reasonable solutions will stem the tsunami that is just around the corner.