$242,000: That's the salary now needed to buy a median-priced house on Long Island

James Hall Jr., 56, is a lifelong renter. But it’s time, he said, to own his home.

His dream: A five-bedroom house in a good neighborhood that he and his family can call their forever home.

“I want to start paying for something that I own,” said Hall, who works for the Town of Brookhaven and rents a house in Shirley for $2,700 a month.

But “prices are a little out of the way,” he said.

Home prices in the region have climbed 41.8% since 2019, and mortgage rates are roughly 3 percentage points higher than six years ago, according to recent data from Realtor.com calculated using asking prices for homes. Those skyrocketing prices mean that households on Long Island planning to put 30% of their monthly income toward housing expenses need to earn 83.1% more than six years ago to afford a median-priced home, said analysts from the real estate listings website. 

The median asking price for a home on Long Island was $911,754 in June, according to Realtor.com. That means a buyer would need to earn $242,000 to afford such a home, a six-figure jump from $132,000 only six years earlier, and far more money than what most households make in the region.

The median income in Suffolk County in 2023 was $122,498, and $137,709 in Nassau County, according to the most recent census data available.

According to Realtor.com data, the median asking price for homes in the New York-Newark-Jersey City region was $786,500 in June and, despite some gains, housing inventory in the New York metro area remained 43.5% below levels in 2017-2019.

“Anywhere around the New York City area or the Boston area has seen really challenging inventory conditions, which have produced that massive price growth,” said Hannah Jones, senior economic research analyst at Realtor.com. 

The figures, which take current mortgage rates and median home prices into account, assume homebuyers are putting a 20% down payment and 30% of their income toward their mortgage — including tax and insurance — each month, she said. Median home prices were calculated using a weighted average of median asking prices for homes in Nassau and Suffolk counties.

Demand for homes in the suburbs surrounding those cities skyrocketed when the pandemic hit, leading to "significantly less inventory in the areas around New York City,” Jones said. “We haven’t really seen home prices soften in the area because there’s still a lot of demand.”

High costs for housing push people of all incomes down the housing ladder, one expert said, with some potentially falling into homelessness, and could lead many to leave the region — potentially causing labor shortages. 

The long-term impact of high home prices "is not sustainable for the economy, for the school systems, because we need to be able to find places where younger or lower-earning people can live and take their rightful place in the economy, even if it's not at the top rung of the earnings ladder," said Lawrence Levy, executive dean of the National Center for Suburban Studies at Hofstra University.

Home prices continue to increase

The rise in home prices extends across the country, not just Long Island, increasing roughly 50% since 2019, said Aziz Sunderji, founder and strategist at Home Economics, a housing research consultancy based in New York City. And, even back then, "a lot of people were struggling to afford a home."

The unusually large bump in home prices that would "normally take years and years to play out" means more people will need to rent for longer than they want, possibly with roommates, he said. That, combined with high rent on Long Island, could also push some people into homelessness. 

"For the majority of people, it means that they're going to just have to rent something that's within their budget and it may not be what they need or what they want," he said. 

"Everyone across the income spectrum is going to have to downshift," Sunderji added. "You might have adults in their 40s, and 50s and 60s who would not have imagined themselves sharing accommodation with others, with people that they don't know, non-family members. That may be one way that people also, at the lower end of the income spectrum, have to deal with these higher costs."

High housing costs also makes it more difficult for people to move to the region, which leads to a "stagnant economy," he said. "From a productivity standpoint, you want people to move to where they think they can contribute."

On Long Island, in June, the median home price in Suffolk County rose to a record high of $700,000 and to a record $850,000 in Nassau, according to data released by OneKey MLS calculated using closing prices. The region also continued to struggle with a shortage of houses on the market, falling 5% at the end of June, Newsday has reported, increasing pressure on homebuyers to bid above asking price. 

Older generations like the Baby Boomers, who bought their homes when the cost of housing was cheaper, are benefiting from the appreciating growth in the market, said Nathaniel Baum-Snow, professor of economic analysis and policy at the University of Toronto's Rotman School of Management. 

Rough market for new homebuyers

First-time homebuyers and those who recently purchased homes "are bearing the burden" of the affordable housing crisis, Baum-Snow said. 

That demographic includes Dan Lloyd, of North Amityville, who is in the market for a home. He is also the founder and president of Minority Millennials, a nonprofit that aims to represent minority groups and young people in Long Island policies.

Buying a house on Long Island is difficult, the 39-year-old said. “The cards are not in the favor of millennial Long Island working class individuals or families, as it used to be.” 

The market has been brutal, he said, reflecting on his own search for a house.

The pursuit of home ownership forces buyers to examine their financial health and whether they’re willing to be “house poor,” Lloyd said, referring to people spending a large portion of their income on housing costs, as defined by Investopedia. 

But high home prices, unfortunately, seem to be “the reality of the times that we’re living in,” Lloyd said, “especially for millennials that are primed to ... take advantage of homeownership in their early to mid 30s.”

At a national level, one reason housing costs have grown so high is because the rate of new housing construction "fell precipitously" after the financial crisis in 2008, said Baum-Snow, who is also co-managing editor of the Journal of Urban Economics. 

Also, there was a "long period of time when there was a lot of land available in suburban areas where people wanted to live, or were willing to live, that houses could be built on," he added. But now, most of that land has been built up and is subject to zoning that inhibits denser development.

"What we've seen in the suburbs surrounding U.S. cities, including Long Island, is basically they've stopped building anything and there's no densification going on as a result," he said. 

The high costs for housing, however, is not surprising, Levy said. He pointed out that while "buying and maintaining a home on one person's salary is an extraordinary lift," most homes have two incomes. 

"The good news is that, for all the problems that Long Island has ... a lot of people still want to live here, and they are relatively high earners and job creators" he said. "The bad news is that Long Island is almost only affordable to those high earners and not the people necessarily who work for them."

Entry-level and service workers, along with tradespeople, making under couple hundred thousand dollars a year might be "squeezed," he said.

Advocates urge government action

Local governments and the state should be doing more to combat the housing crisis, said Hunter Gross, vice president of the Huntington Township Housing Coalition. 

Long Island zoning restrictions were originally created to enforce segregation, said Ian Wilder, executive director of Long Island Housing Services, Inc.

He highlighted Gov. Kathy Hochul's housing plan proposed a few years ago as one that could have helped ease the crisis on Long Island, but it was met with resistance from local lawmakers, with one calling it "an attack on our suburban communities," Newsday has reported. 

The entire region will feel the consequences of the affordable housing crisis, he said, with the flight of middle and lower income families. 

The 2025 state budget includes a $500 million capital fund to build up to 15,000 new homes on state-owned property and an additional $600 million in funding to support housing developments statewide, according to an April news release from the governor's office. 

In 2023, the governor also announced a five-year $25 billion housing plan to establish 100,000 affordable homes across the state. 

Fewer affordable homes means fewer workers, leading to labor shortages, and the region will lose congressional representatives as the population drops, Wilder said. "We're not going in the right direction in order to keep Long Island alive and healthy and strong."

To get around labor shortages, it's possible that restaurants, hotels and other service jobs will need to start paying more, squeezing out businesses that can't keep up, Levy said. That, in turn, could lead to higher prices. 

Gross also emphasized the Long Island brain drain, as more people flee the growing affordability crisis. 

“We have so many people continuing to leave Long Island due to the cost of living and home prices,” he said. “There’s tools in the toolbox for local elected officials to use but they just don’t care to pass any type of meaningful reform when it comes to building the needed housing.”

To ease the pressure, Gross added, municipalities need to pass zoning that allows more than single-family homes to be built, especially rental options as saving for a down payment becomes more difficult for young people.

Accessory dwelling units are another way for homeowners to mitigate the costs to homeownership and provide more affordable housing options for Long Islanders, he said.

“We’re not meeting the moment here,” he added. “I hope that these numbers are a wake-up call to elected officials.”

While there's no "silver bullet" solution for the housing crisis, Sunderji said, another policy that could help people struggling with housing costs includes increasing the number of Section 8 housing vouchers. 

Also, for people to live in cities and suburbs and promote "productive labor markets," workers will need to be paid more, Baum-Snow said, although that would, in turn, increase costs for employers. 

More multifamily housing is needed, along with ways to make it easier for people to downsize when they need to, he said. 

Wilder echoed that, adding: "A lot of the things that people are talking about already exist on Long Island."

Accessory dwelling units and apartments above stores in downtowns "have existed since before I was born," he said. "None of these concepts are changing the so-called structure of Long Island, but we are going to change the structure if we keep pricing people out of living here."

There is a growing consensus at the regional level that more affordable housing, and a variety of housing styles, is needed, Levy said. More villages, such as Farmingdale, are approving affordable denser housing in downtowns. 

Because of the high prices, many buyers have been getting more creative about finding ways to stay on Long Island, said Phoebe Altman, a Douglas Elliman agent.

People are moving to towns they might not have considered otherwise, or moving in with parents, or purchasing a smaller home than they want to, she said.

“It’s gotten very difficult to be a buyer on Long Island and we all try to find creative ways to be able to live here,” she said. Even though many can’t afford to stay in the area, people don’t want to leave.

“They see how desirable it is and they make it work or they ask for help from parents for down payments,” she said.

There’s more interested buyers than there are houses for sale, she said, as more people from New York City look to buy in the suburbs, an area that’s become even more convenient for city workers now that there’s trains going to both Penn and Grand Central.

Although nobody has a crystal ball to predict the future, market data does not suggest there will be a drop in home prices in the near future, Altman said.

“Now is always the best time to buy a house,” she said. “Waiting in this market is never a productive answer.”

'A need' for homeownership education

For Hall, one strategy to help mitigate costs has been attending first-time homebuyer workshops like one recently hosted by JPMorganChase and the Bellport Hagerman East Patchogue Alliance. Individuals who complete the workshop, part of a six-part series, will earn a certificate from the Economic Opportunity Council of Suffolk, which will help them in applications for local government grants.

The free workshop series covers building credit, reducing debt, how to purchase a home and managing a budget after moving into that home, said Kate Travers, a community manager at Chase. 

It also gives buyers the opportunity to ask questions  and adjust to a changing market, she said of the program, which the bank expanded after high demand last year. 

"There’s definitely a need and a want for homeownership education. People want to put roots on Long Island, and they want to know how to do it," she said.

Hall wants to find a home in Shirley, where his two children in high school can stay in the same school district. The median price of sold homes in the area last month was $511,700, according to Rocket.com, with houses holding five or more bedrooms selling for a median $615,000. 

"That’s why if there’s a program to help me out with that, I have to do it," he said.

Newsday’s Jonathan LaMantia contributed to this story.