Long Island housing is likely to only get more expensive if these trends continue…
New York already have some of the most expensive housing in the world. Long Island has some of the most expensive homes in NY. It could get even worse ahead.
Here are four factors driving higher housing costs and eroding affordability now.
- Sandy Proofing Homes
The massive impact of super-storm Sandy, and the increasing volume of storms over the last few decades is forcing homeowners and developers to not only rebuild, but reinforce existing housing. This is far from cheap. At the same time, many of these improvements can also be adding to tax assessments. This will force up sales prices and real property tax bills.
- Tax Reform
CNBC reports that some politicians furiously looking for traction could eliminate numerous write-offs currently helping to reduce state and local taxes, including the mortgage interest deduction (MID). This last change alone could impact an estimated 30M taxpayers, who currently benefit from $70B in claims.
- Rising Interest Rates
Interest rates have held pretty steady, regardless of recent economic changes and fed moves. That could change dramatically ahead. We appear to be on a gently upward trajectory for mortgage rates. A downturn in the stock market could speed that up quite a bit.
- Rising Property Taxes
Whether it is faulty tax assessments or raising property tax rates, property taxes just seem to keep going up on Long Island. Unfortunately, both homeowners’ insurance premiums and property taxes remain two of the most overlooked housing expenses. Most buyers budget by focusing on mortgage payments, and then get hit hard and are pushed beyond where they are comfortable by these items. In order to sustain affordability, home buyers must calculate all housing costs, including ongoing maintenance, and expect inflation to continue driving them higher each year. All regardless of whether their incomes go up or not.
Summary
If you thought Long Island housing was expensive already, it is only likely to keep going up. It’s not just the purchase price which needs to be watched, but taxes, and other related expenses as well. Do your math, and budget accordingly. Set a date each year to review these numbers and seek help in reducing them where possible.