Long Island Real Estate Faces Tight Inventory and Changing Buyer Strategies

Written by:

Steve Marcinuk

Date:

12 Feb 2026

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The Long Island real estate market is grappling with the same inventory shortages and economic uncertainty seen nationwide, but with distinct local characteristics — especially in its cooperative housing segment. Agents and buyers alike are adjusting to a landscape defined by limited supply, evolving affordability, and shifts in buyer priorities.

Abraham Kanfer, a realtor with Daniel Gale Sotheby’s International Realty, offers a perspective shaped by decades in New York real estate. He began his career in the late 1980s running a major co-op department in New York City, then moved into retail business ownership before returning to residential sales in 2018. His experience across multiple real estate cycles informs his view of today’s challenges and opportunities.

Inventory Remains Scarce

Long Island’s housing shortage is not simply a result of higher mortgage rates. Kanfer points out that slow new construction has kept the number of available homes low. Many current homeowners who might otherwise move up to larger properties are staying put, deterred by the prospect of higher monthly payments. “People who are in their homes and considering upgrading to larger homes are not considering it with the interest rate being higher than what they want to pay,” Kanfer says.

This reluctance to move creates a bottleneck: potential sellers who would typically upgrade are choosing instead to renovate or expand their current homes. Kanfer notes that sellers who do come to market usually have a pressing reason — such as a job relocation, a major family change, or an inheritance. “The sellers that are selling have to sell — either they’re relocating, or there’s been a major change in the family dynamic,” he explains.

Economic Factors Beyond Rates

While much attention focuses on interest rates, Kanfer identifies other forces that limit inventory. The once-popular migration to lower-cost markets like Florida and North Carolina has lost some appeal. “Secondary and even tertiary markets have become expensive alternatives. So it’s not that much different from what they were paying here,” he says, making relocation less financially attractive for Long Island homeowners.

Insurance has also become a hurdle. Some markets, especially in states like Florida and California, are now difficult or costly to insure due to heightened natural-disaster risk. “Insurance, to some degree, has become a factor, because there are some properties like California and Florida that insurance companies are not even willing to insure,” Kanfer says. This risk makes moving out of state less appealing.

The rise of remote work has changed how buyers and owners think about location. No longer bound by daily commutes, many are willing to live farther from job centers or to stay in homes that were previously inconvenient. Kanfer observes that “the location of their neighborhood as a commuting issue is not as much a factor anymore, because people are working from home, either the whole week or a good portion of the week.”

First-Time Buyers Shift Strategies

First-time homebuyers are feeling the brunt of higher rates and limited options. With borrowing costs up, they have had to lower their price expectations and broaden their search areas. Kanfer explains, “First-time home buyers who previously thought that with their ability to pay a monthly payment of X amount, they could purchase an $800,000 home at 3% interest, now they’re at the $550,000–$600,000 home, and that’s not in the location of the $800,000 home that they were looking at.”

This affordability squeeze is steering more buyers toward cooperative apartments, a longstanding entry point in New York’s housing market. Co-ops offer lower purchase prices and monthly costs, but they are concentrated in specific areas and generally limited to multifamily buildings. “Co-op has become more of a first — well, it always has been good for first-time buyers, because it’s a low entry point,” Kanfer notes, though he adds that supply remains limited and co-ops are rare outside New York.

Cash Buyers and Competitive Edge

All-cash purchases are increasingly common in the Long Island market. Kanfer reports that a high percentage of buyers can pay in cash, often by selling another property or through business success. “What we see in the market is a lot of all-cash buyers,” he says. This ability to skip financing gives these buyers a significant advantage in negotiations and closing speed.

Sophisticated buyers, including investors, are especially active. These buyers focus on return on investment and are quick to walk away or make aggressive offers if a property does not meet their criteria. “A sophisticated buyer is looking for a cap rate, a rate of return. So if they don’t see that, they will pass, and they’re not afraid to make lowball offers,” Kanfer explains. Their readiness and financial flexibility often put them in the strongest position to secure properties, especially when sellers want a quick, particular closing.

Investment Focus

For investors, Kanfer recommends targeting properties with renovation potential in emerging or up-and-coming neighborhoods. He points to single-family, two-family, and small multifamily properties as offering both strong rental demand and potential for appreciation. “I would be looking at up-and-coming markets in either single, two-family, really probably no greater than four-family units where they can rent out and not only get a high rental because the rental market has increased dramatically, but that there’s upside appreciation potential,” he says.

Renovation experience is crucial to this approach. Investors who can handle upgrades in-house gain an edge, as they can control costs and improve value more efficiently than those relying entirely on external contractors. “A good investment-type property buyer, they’re ready to do renovations. So they can buy a fixer-upper, they can do the work, or they have the crew that can do the work for them, which is cheaper than going to an outside source,” Kanfer says.

Student housing remains a profitable niche for those willing to manage higher wear and tear. Properties rented to students can generate high income, but require ongoing maintenance and oversight. “Student housing is a very lucrative market. It wears your property down, though, because these students don’t care about the condition of the property, and they don’t take care of it. But if you’re willing to maintain it, you can collect a good rent roll,” Kanfer observes.

What’s Ahead

Kanfer expects modest price appreciation in the coming year, with interest rates potentially declining slightly enough to encourage more homeowners to list, but not enough to trigger dramatic market shifts.

At the same time, multigenerational living is reshaping buyer demand. More families are pooling resources and seeking homes suited for shared living, including ranch-style properties, accessible layouts, and new construction designed with long-term flexibility in mind.

In this evolving environment, Kanfer stresses the importance of professional representation. Buyers often underestimate the expertise required to navigate limited inventory and financing complexities, while sellers may not fully recognize the equity they’ve built or how it can support broader life goals beyond their next move.