Why Long Island’s Housing Shortage Is Driven by Mortgage Math

Written by:

Rudi Davis

Date:

20 Feb 2026

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Long Island’s residential market is experiencing a housing shortage that stems less from a lack of available properties and more from the impact of mortgage rates, according to a local real estate professional who works directly with buyers and sellers.

Jeffrey Memisha, a licensed sales associate at Realty Advisors Inc., says the central issue is not physical land constraints or tight zoning, it is that many homeowners who refinanced during the pandemic are now unwilling to give up their historically low mortgage rates. “A lot of people refinanced their mortgages when the rates were in the twos and threes, and now rates are in the sixes or sevens,” Memisha explains. “Most people don’t want to sell, even though they’ll get a lot more money than what they bought their house for, because where are they going to go?”

This situation has created a market where sellers have more equity than ever but little motivation to move. The result is what Memisha describes as persistent demand with few willing sellers.

Geography Isn’t the Main Limitation

While Long Island does face genuine geographic limitations, with little undeveloped land compared to markets like Florida, Memisha says this is not the primary factor driving the current shortage. “There’s not much land that’s open for developing like there is in Florida. What’s here is here,” he says.

However, he stresses that today’s shortage is mainly the result of homeowners making rational choices to stay put rather than trade a two- or three-percent mortgage for one in the sixes or sevens. Even with the potential to sell at a high price, most owners calculate that buying another home would mean higher monthly costs due to both higher prices and much steeper interest rates. “They’re going to have to spend more money because of the interest rate and spend more money because the market’s crazy right now,” Memisha says.

How Rate-Lock Is Freezing Inventory

This “rate-lock” effect is reshaping the market in ways that differ from a typical inventory shortage. Memisha notes that much of the limited inventory consists of properties that don’t meet buyer expectations or have significant issues. The homes that do come up for sale are often those that owners must sell — such as downsizers, retirees moving out of the area, or first-time buyers moving up after outgrowing their starter homes.

The group that’s largely missing, according to Memisha, is the move-up buyer. These are homeowners who bought five to ten years ago and, under normal conditions, would now be seeking a larger or upgraded property. Instead, many are staying put, unwilling to give up their low mortgage rates for a more expensive loan on a new home.

This shift in seller composition means fewer homes are available, and those that do hit the market are often snapped up quickly, regardless of condition. “Most of the people who are making moves on Long Island are moving to Long Island or moving from somewhere else on Long Island to another house here,” Memisha says. Necessity-based moves, not discretionary ones, dominate the market.

Sellers Hold Unusual Pricing Power

Because so few homeowners are willing to list, those who do often have significant pricing power. Memisha says sellers can command premium prices simply because buyers have so few choices. “A lot of people are locked in with their interest rates, and they don’t want to lose it,” he says.

This scarcity also means there are far fewer comparable sales to guide pricing. “When we go on appointments, and we’re printing out comps and looking at other sales in the area, there are maybe three or four comps that we can compare to. Sometimes there’s one, sometimes there’s none,” Memisha explains.

With little competition and a lack of recent sales data, owners of unique or desirable homes can often name their price and get it. “A lot of these people, if they have something unique, they just pick a price that they want, and oftentimes they get it,” Memisha says.

Will the Shortage End If Rates Fall?

Whether this rate-driven scarcity is a temporary friction or a longer-term feature of the market is unclear. Memisha sees no immediate signs of price declines. “Right now, it doesn’t show any signs of the market going down,” he says. If interest rates drop, he expects demand to spike further, likely pushing prices even higher.

The sustainability of this market depends on whether homeowners continue to prioritize their low rates over life changes, and how quickly rates might come down to free up inventory. For now, Long Island’s shortage has less to do with what’s physically available and more to do with what homeowners are willing to give up to move.

Memisha’s observations suggest that until rates change meaningfully, the region’s housing crunch will persist — not because homes don’t exist, but because owners have little incentive to sell.