An advertisement on an Internet classified service reads: “Reduced for Quick Sale. Three bedroom home, all new drywall and appliances. Dropped to an unbelievable price. Owner needs to relocate for employment reasons.” Under most circumstances this home, and the area in which it is located, would have driven many people to seek this unbelievable offer. However, this home, located on the Jersey Shore, now has the stigma of being a storm home.
Even though this particular home sits considerably higher than others in the area and was not subjected to the flooding, potential buyers are not willing to come to the shore area and deal with the flood waters and cleanup process just to grab a good deal on a home.
The owner of the home has had a few calls about the property, but most of them have been rental proposals and not an interest in purchasing the home. While the owner is desperate to sell, he is not willing to rent at this time. His new employment is taking him across the country, and he does not feel he could be an effective landlord.
Many real estate agents in New Jersey, New York, and Connecticut areas have stated that this is not uncommon in the industry once this type of storm comes through. In fact, they have stated that you can count on the following things to occur in the real estate market in this area over the next year:
- A significant increase in the need for rental units. Displaced homeowners that are rebuilding and construction crews will need a place to live during recovery efforts.
- Any pending sales and closing will be delayed, possibly for months, as banks and other lenders require new appraisals and home inspections of any homes that were in the storm area.
- Investors will come into the area looking for good deals and quick sales.
One relator stated that she has already received calls from potential clients stating they had $500,000 cash to buy any home, in any condition in New York’s Rockaway Peninsula. She regretfully informs them that this will not happen because these properties were selling at $5 million and above before the storm. Even damaged, the properties are worth much more.
Memories Of Hurricane Hugo
In 1989, Hurricane Hugo hit the barrier islands of South Carolina, many thought that the area would be devastated and property values would fall. In reality, home values increased significantly over the next few years as improvements made to the area sharply increased property values.
Hugo was a devastating storm, destroying nearly everything in its path. Bridges were destroyed, buildings were flattened, and even the beach was eroded to the point that it was unrecognizable.
Instead of this devastating the area, people in this area used the storm as a way to build bigger and better. Beach homes were replaced with large sturdy homes, built to withstand any storm. New bridges were built that were more secure and allowed for more traffic flow, increasing travel to the area. The beach was restored and area businesses returned. The fear of another storm was no longer scary, and this area blossomed into one of the most exclusive areas in the South.
The New England area can only hope that it can repeat the same type of recovery that was seen in Charleston.
How Things Differ Now From The Time Of Hugo
One of the largest differences between hurricanes Hugo and Sandy, however, is bank-lending procedures. New credit standards that have been put in place since the market crash in 2007 have made it much harder to get financing on a regular home, let alone one that has been damaged in a storm.
Property insurance may also be very expensive to get after a storm has hit an area, with some insurers refusing to cover any properties in that area. This may cause some buyers to shy away from buying there, regardless of the deal. Other potential buyers may cancel deals, too afraid of being in the path of another storm in the future.
Real estate agents have also stated that many people will simply leave the area and allow their homes to foreclose. This could drive property values down, causing buyers to be afraid to invest into the area.