After so much partisanship and election bickering, it’s good to see our leaders reaching across the aisle and embrace cooperation in the face of a crisis. Both Barack Obama and Chris Christie came together in New Jersey to survey the wreckage and discuss how to rebuild. Whether or not you see any cynicism behind the cooperation, it’s good to see our leaders finally put down the sabers – if only for a moment.
However, even if the political tempest has died down some, the fury left in Hurrican Sandy’s wake may have complicated and far reaching consequences for the housing market and those of us who hold stake in real estate investments. As a preliminary concern, the sheer unpredictability of a tropical storm, especially one of Sandy’s destructive magnitude, has left many communities and home developments in disarray. The stock market can go into flux over the sinking value of the dollar or a barrel of crude, but nothing takes more personal a toll than damage to home or property.
That being said, the bevy of regional damage that Sandy left could hit the housing market on multiple levels. The first and foremost is the halt on sales and home closures in severely affected regions. Homebuilders and real estate players will have to take much of the windfall for both sales freezes and properties of theirs that were damaged by the storm. A tentatively recovering housing market could take a possible step backwards, with major homebuilders staunching their losses and scaling back what would otherwise be more assertive pushes towards home sales and property acquisition.
And while human concerns takes precedence over investing qualms during moments of crisis like this, there’s likely to also be homebuyer hesitancy in the wake of a storm as severe in impact and range as Sandy. Areas with particularly severe regional tolls will likely see a downturn in purchase interest- as both homebuyers and current homeowners may turn their sights away from the most seriously afflicted areas. Coastal New York and New Jersey may see a special exodus of both interested buyers and current owners. Connecticut and the Massachusetts Cape may also experience a lesser version of this phenomenon. Needless to say, previously lucrative investments or valuable property locales may see a sudden dip in value.
Even with the actuarial concerns around storm damage and disaster insurance taking their toll on housing market bullishness, the nature of the game is going to change along weather prediction lines. Areas that exist within the possible wake of a hurricane but more guarded against the consequences of extreme weather may vastly become more valuable endurance investments, providing both security for the realtor and solace for the homebuyer.
Another consequence that begs a sort of insensitive pun is that many foreclosed and bank-owned homes will now be flooded or lost due to storm damage. Underwater properties that had fallen into the hands of banks may be lost entirely, and with much of the prophesied housing rebound buoyed by a feeling of security in the mortgage and lending bracket, this could leave its own damaging wake.
Ultimately the long-term ramifications of Hurricane Sandy have yet to fully play out, but it would seem well advised that property investors and realtors take a lesson from the storm crisis and exercise caution in what would have previously been safer areas.