For some residential real estate brokers, when Hurricane Sandy hit, the deals stopped. And they have not yet picked up. Indeed, while much of the city and surrounding area has gotten back to business as usual, there are a handful of communities where, of course, that is not the case.
This month, as part of The Real Deal’s broader coverage of Sandy, we talked to brokers from three of those areas — the Rockaways in Queens, Staten Island and Hoboken in New Jersey — to see how they rode out the storm and how the hurricane has impacted their business in the last month.
What we discovered is that, along with the residents the storm left homeless and the damage it did to property and infrastructure, it also put the kibosh on the real estate market. Indeed, in areas like Breezy Point in the Rockaways, where 110 homes burned to the ground during the storm and in some of the low-lying waterfront neighborhoods on Staten Island, the market has ceased to exist.
“The residential sales volume in the affected areas is almost nonexistent,” said Mimi Neuhaus, founder of the Staten Island brokerage Neuhaus Realty.
Not only have buyers backed out of deals and closings been put on hold, but until homes are rebuilt there is little reason to believe that the market will restart.
There are two exceptions to that. The first exception is investors who have started sniffing around distressed homes with the intention of renovating and selling. The second is displaced families who are looking for short-term rental housing.
But the latter is already proving to be a challenge. “We do not have the inventory to house owners while they wait until their homes are rebuilt,” said Lisa Jackson of the residential brokerage Rockaway Properties.
Other longer-term concerns center on whether buyers will reconsider purchasing property in vulnerable waterfront areas and whether flood insurance will be available if they do.
Meanwhile, in Hoboken, which saw major flooding, the market seems to have bounced back quicker. The market there has picked up after a few slow weeks. But there, too, brokers have to deal with finding displaced residents’ rentals and have undergone a shift in thinking about the risk of flooding in ground-floor apartments. For more, we turn to our panel of experts.
The Rockaways
Lisa Jackson
president, Rockaway Properties
Did you have properties or listings in the Rockaways that were damaged or destroyed by the storm?
Every home was damaged by varying degrees. We are currently regrouping with our clients to assess the market and each client’s immediate needs.
From a business perspective, what is the greatest challenge you’ve faced in the wake of the storm? Lack of electricity? Property damage? Transportation?
All of the above and difficulty communicating with our clients.
What long-term impact do you think Sandy will have on the real estate market in the Rockaways? What factors will come into play?
We think there will be a period of uncertainty and some price reductions as we move forward … [but] we have a very stable community, and most of the buyers and sellers are committed to staying and rebuilding in the Rockaways.
Over the next few months, what do you think will be the biggest challenges to selling or renting residential property in the Rockaways?
A challenge for renting might be we do not have the inventory to house owners while they wait until their homes are rebuilt.
Are you seeing investors or developers already starting to look at buying or developing property in the area to take advantage of the post-Sandy market?
We have been approached by investors and buyers looking to purchase distressed properties and renovate these homes with a quick turnaround. We are here to help those looking to sell and, in turn, restore and rebuild our community.
Robert Tracey
broker/owner, Tracey Real Estate
How did your office in the Rockaways fare during the storm?
The office in Gerritsen had five feet of water.
Did you have properties or listings in the Rockaways that were damaged or destroyed by the storm?
My clients in Breezy Point [where 110 homes were destroyed by a fire] and the Rockaways were obviously very affected. So many homes were destroyed or burnt down. Right now the emotional level is still so high. We are waiting. It is too soon. In most of the Rockaways, there is light and heat. Breezy Point is still not up and running. Probably in the next four to six weeks.
Do you think the storm will deter homeowners from staying in the area?
People who want to live by the water know the hazards of wind, rain and surf. The community will come back stronger. There are some families that have been there 60, 70, 80 years. All in all, [the community] may lose 10 percent of the snowbirds [who] might say they are not going to wait for another storm.
From a business perspective, what is the greatest challenge you’ve faced in the wake of the storm? Lack of electricity? Property damage? Transportation?
A little bit of everything in the wake of the storm was affected. The shutdown of gas was an unforeseen problem. Also, how to help those displaced people who need a place to live but don’t know how long they need it, and then finding them a short-term place to live.
What long-term impact do you think Sandy will have on the real estate market in the Rockaways?
Will flood insurance be available? Can they afford to live there if it isn’t? Some people have lived there for 50 years and maybe won’t rebuild or they will sell the land. In Breezy Point, it’s a question as to whether they will be allowed to build right next to each other again. Mandated changes by the city will be made to new construction to make houses safer.
How is overall residential sales and rental volume in the Rockaways now?
Nonexistent, but it will come back strong. Everyone is active repairing what they can. Any properties that were affected in Brooklyn or the Rockaways has to have a mandatory property inspection.
What impact do you think the destruction of the Rockaways’ boardwalk will have on the overall real estate market — specifically the retail market — in the area?
It will definitely affect the retail. It depends on how fast they can rebuild the shore. A lot of owners weren’t required to have flood insurance, but they can apply for loss of business income.
Over the next few months, what do you think will be the biggest challenges to selling or renting residential property in the Rockaways?
Getting everyone to believe this isn’t going to be a common occurrence.
Staten Island
Mimi Neuhaus
founder/broker, Neuhaus Realty
What did you personally do to ride out Superstorm Sandy? Did you evacuate or stay in the neighborhood?
My home is located in an area where the storm surge was not a concern, so I was able to stay home during the storm. I did advise the agents in the office to remove all signs from the listings. I advised those clients located in the dangerous areas to heed the warning of the officials and evacuate as advised.
Did you have properties or listings in Staten Island that were damaged or destroyed by the storm? What are you doing to market these properties and others that were not damaged?
Several office listings which were located in the low-lying beach areas of Staten Island were damaged or flooded in the storm. The damaged homes will not be marketed until the damage is completely evaluated and the necessary repairs made to make the home habitable. The condemned properties will obviously be off the market until they are rebuilt. The homes that were not damaged will continue to be marketed as usual.
What is the state of mind among Staten Island residents? Are they anxious to leave the neighborhood, or do they want to rebuild?
Many of the Staten Island residents whose homes were destroyed or damaged are planning to rebuild. Amazingly, when you speak to these residents, they are extremely hopeful and grateful for the ability to rebuild and for the assistance and support from the local community.
What long-term impact do you think Sandy will have on the real estate market in Staten Island?
The real estate market on Staten Island will likely stabilize in the long term. I believe most property values will return to prestorm figures. Those properties in the most heavily affected areas will likely see a decrease in values. Buyers in this area will likely become more sensitive to a particular property’s elevation. Insurance rates are likely to rise in this area, and in certain elevations insurance may not even be attainable. The Department of Buildings is currently evaluating the construction codes in the heavily affected area. There may be some changes in the requirements for new construction as well as updating the codes for preexisting homes. Some lots may be deemed unbuildable.
How is overall residential sales and rental volume in Staten Island now compared to just before the storm? What do you expect to happen to sales volume along the vulnerable waterfront?
Residential sales [throughout Staten Island] have been steady since returning to business as usual. But the residential sales volume in the affected area is almost nonexistent. Rental volume has increased dramatically. Many families are displaced due to damaged homes and devastated neighborhoods. The rental inventory has not been able to keep up with demand.
What kinds of discounts off asking prices were being seen in the area before the storm? Do you expect more discounts now because of more devastation in the area?
Sellers can expect to receive an average of 5 to 7 percent off the asking price for a property. I do not expect this expectation to change because of the storm.
Over the next few months, what do you think will be the biggest challenges to selling or renting residential property in Staten Island?
There will be challenges ahead to selling or renting in the areas most affected by the storm. Some contracts have fallen through and buyers have backed out of some deals. Buyers will certainly be more cautious about purchasing a home in the vulnerable waterfront areas. The rental market could potentially decrease as well.
Hoboken
Eugene Cordano
director of sales, metro New Jersey, Halstead Property
What impact did the storm have on your properties and listings in Hoboken?
We were back on Nov. 5 with no flood damage to the office, but activity was slow [at first]. [Then it shot up] to previous pre-Sandy levels, but Hoboken has nothing on the market. There are less than 140 total properties available on the MLS. The market is strong. The storm gave pause, and the people that were displaced are snatching up what was available in rentals, which tightened the market.
From a business perspective, what is the greatest challenge you’ve faced in the wake of the storm?
Transportation is the biggest challenge. The Hoboken PATH station is still closed. Buses and ferries cannot absorb the traffic. There are people that are traveling three hours on the bus through the Lincoln Tunnel. The property damage is not detrimental enough to be permanent. There was no catastrophic flooding like at the shore.
What long-term impact do you think Sandy will have on the real estate market in Hoboken?
Right now, I think the impact is that it puts everyone on notice that this could happen again, and that will change how spaces are used, with the [location of utilities especially]. Hoboken was in demand before, so I don’t think it will hurt our market. I think some good will come out of it with improvements to designs … but it remains to be seen.
How is overall residential sales and rental volume in Hoboken now, compared to just before the storm and a year ago at this time?
It is very strong year over year, [but] there haven’t been enough closings. Last month, many closings did not take place that might have. There are a number of things on the market that we cannot show because they are being cleaned up and are put on hold. We are taking names and numbers of buyers or renters. As soon as we are cleared, we can move quickly to put them back on the market. The average time a house is on the market is below 55 to 60 days. We may see that tick up a little as units clear inspection.