How Has Hurricane Sandy Affected Home Values?
On November 27 Patrick Parker Realty discussed the Real Estate Marketing Insider’s observations on Reuters’ examination of the possible consequences that Hurricane Sandy and how the real estate market in areas affected by the storm may be affected.
With more than 2 months of retrospect, we are now able to offer some additional insights in the affect the storm has had on New Jersey real estate in Monmouth and Ocean Counties.
The truth is, it is still a bit too soon to see a direct connection between area home values and Hurricane Sandy.
Here is what we do know:
We have seen listings with TWO prices:
(1) one for the house as is
(2) another price if the repairs are done
General Shifts in Real Estate Trends
- Immediately after Sandy, there was an increase in sales in condo communities that were untouched by the storm. Some who were displaced with the means to do so were investing in low cost housing in lieu of dealing with a depleted rental market.
- Rentals have exploded.
- There is a noticeable increase in interest in properties inland. Clients are contacting our office requesting information on mid-priced housing specifically not located in flood zones. That is the immediate reaction.
Any short-term market downturn following Sandy is likely to be followed by a quick rebound.
For this we’ve examined natural disasters of the past and studied their impact on local housing markets. Generally, home sales pause but in later months, as insurance money begins to flow in, the housing market gets elevqated to higher levels than before the storm.Data tied to comparable natural disasters suggest that home prices tend to be inversely affected. With inventory levels reduced, demand tends to outweight supply causing prices to inch up. Rebuilt properties will feature costly upgrades such as sturdier roofs and wind-resistant windows, which also may increase resale prices.
- Studies done in the aftermath of natural disasters like Katrina and the March 2011 Japan Earthquake that caused the Fukushima nuclear disaster generally forecast a bleak picture, however, these studies never reflect realities on the ground.
- To people that already live in the area, destruction doesn’t matter much.
- Disasters more affect the people coming from the outside. It makes a difference in how outsiders view a destination.
- After Hurricane Andrew hit in 1992, Miami saw a major rise in housing prices for two years following the storm.
- The desire for Beach Living will NEVER go away… the allure is just too great. People like the beach, and property ownership on barrier islands is not going to be made illegal
It is a psychological truth that people forget about Natural Disasters
As debris is cleared, rebuilding continues, homes are rebuilt and the area begins to thrive again; shore-lovers and outsiders alike will view the Jersey Shore as a highly desirable destination as they always have.