Housing crunch could stunt LI growth, says economist.

The Long Island economy is in good shape, but future growth will depend on how well rising housing costs in the area are addressed, economist, Pearl Kamer, told CoreNet Global Long Island Chapter during her annual outlook speech.

"Thanks to its recent diversification, the Long Island

However, she noted, "It's time to address the cost factors that could eventually derail future growth."

She said the Long Island economy is entering a period of transition. "How well it does during the coming year will depend on part on how it solves the problems of affordable housing, so young, college-educated workers can remain on Long Island," she said. "But, it also depends on what happens to the national economy."

Kamer said Long Island job growth has not been robust and noted that fewer than 11,000 new jobs were added in the 12 months ended in November. She contrasted that to the late 1990s, when 30,000 new jobs were created annually. And, Kamer added, "Although Long Island's unemployment rate, 4 percent, signifies a full-employment economy, Long Islanders are laboring under heavy mortgage and credit card debt loads.

"Long Island homes are clearly unaffordable for most families and many recent purchasers had to resort to interest-only mortgages to get on board the housing market."

She noted that median home prices in Nassau County rose from $252,000 to $482,000 between 2000 and December, 2005, virtually doubling.

Kamer noted that there is little land for new residential construction at a time when housing demand from immigrants and newly formed households remains high. In addition, construction moratoria in various towns have taken land off the market for prolonged time periods.

Higher local taxes and numerous taxing municipalities in the region are also inhibiting the Island's economy.

Long Island's commercial and industrial real estate markets continue to thrive, despite lackluster job growth, but Kamer noted that vacancies are rising.

She cited Sutton & Edward's fourth-quarter industrial vacancy report, which put vacancy at 6.23 percent, up from 5.42 percent in the third quarter.