“Reduced for Quick Sale!” reads Mike Montalbano’s Craigslist ad for the three-bedroom home he needs to sell before he can relocate for a new job.
The drywall is new, as are the appliances. The only problem? Location. Montalbano’s home is in Tom’s River, New Jersey, which was pummeled by last month’s Sandy megastorm.
“A lot of people are scared to come back to the water,” says Montalbano. “Back in the day, everybody wanted to come to the shore. Now it’s a mess down here.”
Montalbano was lucky. His home sits higher than others, and the storm waters hit his lawn but did not make it into his house.
That has not proved compelling to would-be buyers. His house is listed for $245,900, some $5,000 less than his original asking price. And even if he sells for that amount, he will lose about $40,000 on the property.
Several renters have inquired, but Montalbano fears that tenants could hurt his property. On the other hand, he does not think his odds of selling are very good. “The market will come back, but who knows when?” he says.
That is the “crystal ball” question that no one in Sandy-affected areas such as the New Jersey shore, Staten Island, New York and New York City’s Rockaway Peninsula can answer.
But there are a few things real estate agents can say with confidence.
First, the rental market in these areas is set to explode, thanks to a combination of displaced homeowners and contractors needing temporary housing.
Second, currently scheduled closings will be held up as buyers try to renegotiate and banks require new inspections and appraisals.
And third, investors looking for fire sales will come sniffing around.
“I’ve had people calling me saying, ‘I’m interested in oceanfront, and I’m ready to buy it now for $500,000,'” says Robin Shapiro, whose real estate business in Neponsit, New York, on the Rockaway Peninsula bears her name. “That’s not going to happen. Last month a property in Neponsit sold for $5 million. No one is dumping these oceanfront properties.”
History might prove her right. In South Carolina, where the barrier islands were trounced by Hurricane Hugo in 1989, home values rose sharply in the years immediately following and have been on an upward trajectory ever since.
A Zillow.com analysis shows home prices along the South Carolina coast rose 2.3 percent over the last 10 years, twice the rate of inland properties in the state.
Michael Scarafile, president of Carolina One Real Estate in North Charleston, South Carolina, remembers how Hugo led to an influx of properties on the market – and hordes of investors.
“Immediately afterward, you had opportunistic people taking advantage of people who said, ‘I’m done; I’m selling the house as is,'” Scarafile says.
Those who did not sell brought in a kind of post-Hugo renaissance.
Old bungalows that were completely destroyed or condemned gave way to new construction of high-end homes that could better withstand the next storm. The bridge to the barrier Isle of Palms was washed out by Hugo and replaced by a stronger structure that could handle more traffic. Palm trees replaced power lines, which were placed underground. And everyone was putting in new kitchens and new roofs, which revitalized the existing housing stock.
“Over the next year or two, the islands really had a new birth,” says Scarafile. “Memories are short. And now here we are, 23 years later, and we’ve never had anything close to Hugo.”
Realtors in Sandy-affected regions can only hope to repeat Charleston’s story. For now, the mood is anxious and uncertain, and anyone looking to make a tidy profit in storm-damaged real estate is taking a risk.