U.S. Housing Market Conditions, First Quarter 2003: National Data

Nassau-Suffolk, New York
Population for the Nassau-Suffolk metropolitan area increased by approximately 145,000 between the 1990 and 2000 Censuses, an annual growth rate of 0.6 percent. The economy has been resilient in light of a national economic slowdown, but job losses have been increasing. Nonfarm employment declined 0.2 percent, or 2,600 jobs, in the 12 months ending February 2003. The education, health, construction, and leisure and hospitality sectors gained jobs. Employment losses were greatest in manufacturing and the professional and business services sectors. Increases in the unemployment rate since 2001 have been more a reflection of the substantial increase of people entering the labor force than the result of job losses. The unemployment rate as of February 2003 was 4.2 percent.

Very tight market conditions exist in the metropolitan area for both rental and sales housing. Between 1990 and 2000 the number of households in the area grew by 60,452 while housing inventory increased by 52,865. Residential building permit activity in the Nassau-Suffolk metropolitan area totaled 4,701 in the 12 months ending March 2003, a 22.8-percent decrease over the previous 12 months. Suffolk County, with land available for development, issued 80 percent of all the permits in the area since 2001.

Sales volume remains high. Between 2001 and 2002 sales increased 2.5 percent in Nassau County and 1 percent in Suffolk County. The rental market in Suffolk county remains tight even though more rental units have come on the market during the past 3 years than any time in the past 30 years. Because of a greater availability of land, however, the market is not as tight as that in Nassau County.

Rents for one-bedroom apartments in the Nassau-Suffolk area average $1,700 and rents for two-bedroom units average $2,500.

Due to the scarcity and cost of developable land and very strong demand, affordable housing is a key issue in this market area, and communities are addressing the need. In the town of Hempstead, in Nassau County, construction has begun on a 396-unit rental development where 20 percent of the units will be made available to households with incomes at or below 80 percent of area median. Rents in these affordable units will range from $738 for a one-bedroom and $1,023 for a three-bedroom unit. The market-rate units are scheduled to rent for $2,000 to $2,500.

Corporations are finding the tight housing market a deterrent to recruiting employees who would have to relocate into the area. To reduce this problem an employer-based housing assistance program, the Long Island Home Works Partnership, was started approximately 3 years ago and now includes 18 public and private employers. Families receive down payment assistance through Home Works, which receives $500,000 annually from the New York State Affordable Housing Corporation. Some companies also offer other programs to help employees with closing costs.

Mirroring changes in the local and national economies, the overall office vacancy rate at year’s end for Nassau and Suffolk was 14 percent, up from 10.9 percent the previous year according to preliminary figures from Cushman & Wakefield, Inc. Meanwhile average rents for prime office space fell to $26.19 per square foot from $31 a year earlier. The industrial market, on the other hand, is likely to remain strong because of limited inventory of space available. Nassau County recently created a new not-for-profit economic development corporation to create jobs and to facilitate private development of the county’s real estate holdings. The corporation will be funded by proceeds from development projects and by grants from federal agencies.

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