Northeast Market May Rebound Fast After Sandy

Hurricane Sandy’s unforeseen cataclysm caused both tremendous human tragedy as well as damage to property and infrastructure. Those of us who have friends living in New York City, or who have merely seen footage of the flooding and destruction, are well attuned to the toll the storm took on the northern stretches of the Atlantic Coastline. While certain concrete factors point to signs of a rebound, the lingering fragility of the housing market means that any fluctuations (whether caused by disaster or government action) could have the effect of stymieing chances of a market turnaround.

The American Northeast, along with California, is known for having some of the most active markets with the highest home prices. Following Hurricane Sandy’s sweep across New York and New Jersey, many lucrative or otherwise safe real estate investments suffered serious damage. There were even ongoing predictions of consumer hesitancy if such extreme weather events are likely to reoccur. Understandably, both prospective homeowners and property investors are feeling newfound unease around new homes for sale in the North Atlantic housing market.

That being said, some current signs point towards a swifter recovery in hurricane-afflicted areas than previous expected. According to a new report from NorthJersey.com, the local housing market may turn a surprisingly quick recovery. While Sandy destroyed about 70,000 homes in New Jersey alone, recent analysis from Federal Reserve Bank economists project that the housing market itself will not suffer protracted damage following Sandy’s passing.

The Federal Reserve released a regional brief last Thursday predicting that once the fiscal aftershocks have been mitigated, the market will likely rebound quickly. As the statement noted, it’s typical for consumer confidence and home prices to take a dip after a storm, but that rebound tends to occur shortly after the apprehension has passed. In fact, according to standing figures, only 2% of New Jersey’s housing stock was negatively impact. By comparison, the severely impacted New York state had only 4% of its housing stock damaged in any way by the weather.

However, certain actuarial concerns will remain for the long term. The cost of homeowner’s insurance and disaster coverage will rise dramatically along the most intensely affected areas of the New Jersey shoreline. Simultaneously,demand for shore property will decline, as cautious homebuyers will be apprehensive about future storm episodes. Despite these tightly segmented consequences, New Jersey and New York’s housing markets will likely keep pace with a national recovery. Once Sandy’s psychological impact has faded, the concrete areas of damage and concern appear quite restricted.

Harrison Stowe is a writer for NVR Inc., a prime developer of Maryland. Addressing a range of real estate topics including investment, mortgages, and new construction, Stowe combines finance knowledge with additional experience working with Ryan Homes in the current real estate market.