Fire sale or the next boom?

From Reuters:

After Sandy, some dump homes, while others hunt for bargains

“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 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.

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71 Responses to Fire sale or the next boom?

  1. The Original NJ ExPat says:


  2. The Original NJ ExPat says:

    Stagnant wages + Rising Taxes + Large demographic selling to smaller demographic = Lower prices. Add in the specter of higher interest rates and/or phase-out of mortgage interest deduction for some or all…this isn’t you’re dad’s Oldsmobile, even though the driveway looks the same.

  3. The Original NJ ExPat says:

    damn. your not you’re.

  4. Fast Eddie says:

    Someone will step in, buy and re-build; whether it’s the original owners or someone else. There will be no void. The homes will be brand new and the price point will be the same or better. It’s the shore, the Jersey Shore and people would rather die than give it up.

  5. Brian says:

    I don’t know if prices will project upward or not but they are certainly different than inland properties. These can easily be rented providing cash flow.

  6. Painhrtz - Not like you can dust for vomit says:

    nom yesterday, I actually have been hunting my neighbors property this year. shot one went back in house and fed kids. Penn is too restrictive on out of state hunters, but believe me there are deer everywhere in your neck of the woods.

  7. Painhrtz - Not like you can dust for vomit says:

    Grim so major heroin ring gets busted in Wayne. Time to move?

  8. Ragnar says:

    It’s time for Christie to spend some political capital on tough reforms in NJ. More likely he will play it safe and try to jump to another job before NJ’s collapse can be associated with him.

  9. Essex says:

    Actually you have lots of folks that were underinsured. They are sitting on ruined homes with little or no hope of rebuilding. 2nd homes mean they are screwed.

  10. yome says:

    Was Sandy the once in every 100 years event everybody was waiting for? At a rock bottom bargain price next event will not be for another century.Insurance will for sure be a killer if you can even get it.

  11. Essex says:

    The shore is dead for at least a decade. Good thing Snookie was at least safe.

  12. Grim says:

    12 – it’s dead until the first nice day next spring/summer.

  13. Essex says:

    13. I’m done there. Watch surviving areas hike prices. We’ll try another vacatipn venue.

  14. Grim says:

    7 – Wayne or Paterson? Story said Paterson even though the AP tagged it Wayne in their header.

  15. Grim says:

    Ah I see now, Passaic county sheriffs lead the bust, they are hq’ed in Wayne.

  16. Grim says:

    Sandy’s impact on Jersey jobless claims:

    [New Jersey] +31,094 Increase in initial claims due to Hurricane Sandy. These separation were primarily in the accommodation and food services, manufacturing, transportation and warehousing, administrative service, healthcare and social assistance,construction, retail, professional, trade, educational service, and public administration industries.

  17. Mike says:

    Good Morning New Jersey

  18. Mike says:

    All I need is my beach chair, umbrella and cooler. I’ll be there

  19. NJCoast says:

    ….and my martini shaker and glass.

  20. Libtard in the City says:

    Shore will be up and running by Memorial Day. Sure, there will still be some signs of Sandy, but the beaches will be clean, the boards will be repaired and you’ll still be able to get your sausage and pepper sandwich. Where the destruction will remain intact will be the poorer shore towns (if you can call them that) just west of Sandy Hook. Like Cliffwood Beach and Keyport. Those are the folks who didn’t carry insurance on their bungalow homes. All of the commercial establishments that call the Jersey Shore their home will rebuild with insurance dollars. And they’ll be cleaner, stronger and a hell of a lot newer.

  21. Comrade Nom Deplume says:

    Probably won’t go to the shore this summer. Spring in Maui and Christmas in Park City mean that the travel budget is busted through 2013.

  22. Libtard in the City says:

    Park City is awesome. Have fun.

  23. Essex says:

    I’m bored with all things Jersey.

  24. Brian says:

    especially blogs that talk about them all day

  25. Juice Box says:

    Essex – Spring lake has already begun repairing their boardwalk. They will be open for business this summer.

    I am going to cut a check and get my Summer season rental now, since rentals for the the entire summer will be very hard to come by.

  26. Juice Box says:

    Park City? You bastard. This is the first year I won’t be skiing over Christmas vacation in a long long time. The newborn and the three year old are just too much for the Grandparents to handle by themselves for a week. I even offered to fly them out to Colorado and put them up but no dice they want Christmas at home in the Midwest. Looks like I will be doing tubing at the local hill which has about 1 1200 ft run. :( I will be drinking heavily….

  27. Brian says:

    Anyone hear about Seaside Park? Tryin to figure out if I should go this summer or get my deposit back. I heard they weren’t hit as bad as Seaside Heights.

  28. grim says:

    Probably won’t go to the shore this summer. Spring in Maui and Christmas in Park City mean that the travel budget is busted through 2013.

    Expect a large state funded advertising campaign specifically intended on drawing vacationers to the shore to help the local economy.

  29. Painhrtz - Not like you can dust for vomit says:

    Nom wife and I did christmas in Park City a couple of years ago. Get the pass that allows you to ski all three areas. We got it even though I could not go to Alta since i’m a knuckle dragger

  30. Comrade Nom Deplume says:

    [30] grim,

    I expect it but unless they are giving me a subsidy, no soup for you! Two major vacations in one year means that the Deplumes are tapped out.

  31. grim says:

    We went to Nola post Katrina specifically to show support and spend our tourism dollars in their local economy.

  32. Libtard in the City says:

    We got to Nola every other year for Jazzfest. Brought our son for the first time this year and he seemed to enjoy the experience.

  33. chicagofinance says:

    Stu: I am really depressed to say that I am guessing you are completely wrong. I think a hell of a lot of businesses and people just had a money hole blown through them. Further, it is not as simple as rebuilding. There was a massive amount of grandfathering and legacy of a whole host of things, and now everyone is at the mercy of unyielding government beaucracy in the most hideous ways……how about being ADA compliant as well as being insurable? Care to build a wheelchair elevator in your boogie board shop? I have no clue, but it is going to suck like no tomorrow……

    Libtard in the City says:
    November 21, 2012 at 10:43 am
    Shore will be up and running by Memorial Day. Sure, there will still be some signs of Sandy, but the beaches will be clean, the boards will be repaired and you’ll still be able to get your sausage and pepper sandwich. All of the commercial establishments that call the Jersey Shore their home will rebuild with insurance dollars. And they’ll be cleaner, stronger and a hell of a lot newer.

  34. Fast Eddie says:

    Post of the day on Zero Hedge:

    Biddy Botter Bought Bum Butter… Blah said Bum Butter’s Bitter But it’s Blended in my Batter… Biddy Botter Bought Better Butter, Better than the Bitter Butter, now her Bitter Batter’s Better…

  35. chicagofinance says:

    Katrina gave insurance companies a how-to manual to protect their investments as ongoing concerns……insurance companies are not going to suffer…their policyholders will….either through loophole in coverage today, or for every $ paid to cover a 2012 event, you will be soaked like no tomorrow going forward….within 5 years you will be giving the money back…..given the choice, I would take money and walk…..

    Libtard in the City says:
    November 21, 2012 at 10:43 am
    All of the commercial establishments that call the Jersey Shore their home will rebuild with insurance dollars.

  36. The Original NJ ExPat says:

    [4] FE

    Someone will step in, buy and re-build; whether it’s the original owners or someone else. —Agreed.

    There will be no void. —Agreed.

    The homes will be brand new and the price point will be the same or better. —Well, of course a nice new house built where a 40 year old bungalow once stood will be worth more than the prior structure. But apples to apples new construction will command higher taxes and higher initial costs which should be a lot less appealing to a similar reno on a cash flow basis. Also, if we do see another leg down in the overall housing market, it’s highly unlikely that shore properties go in the opposite direction.

    It’s the shore, the Jersey Shore and people would rather die than give it up. —It’s the end of the baby boomers’ consumption cycle, and they will die.

  37. NJCoast says:

    Went up to the Starland Ballroom yesterday to see if I could salvage any of my equipment I had up there. The place took on six feet of water. All that’s left in the kitchen is the sink. It’s going to be awhile before Aaron Lewis can make up his scheduled November 4 gig there.

  38. Libtard in the City says:

    Chi…I respect your prediction, but don’t agree with it. It is very possible that Point Pleasant becomes more like Deal as those who can afford it might be from a higher class, but I’m fairly certain someone will rebuild. Every time I’ve been to a place where a disaster had recently occurred, it absolutely amazes me how resilient the locals are. Whether it be Gulfport/Biloxi, Nola, San Fran/LA after major earthquakes, the Caribbean after a Hurricane decimates islands (St. Maarten comes to mind), Mexico (Cancun rebuilt awfully quick) or even Florida. Why would things be different here? As a matter of fact, I can’t think of a single disaster that really made a major change to how any city or place appears/functions. Well besides the Newark riots.

  39. Painhrtz - Not like you can dust for vomit says:

    Lib ever been to south central LA, still a bombed out hell hole.

    I think recovering from natural disaster requires a common sense of community. Having lived in a few shore towns they will definately come back, what comes on the other hand no one could tell. Who ever mentioned the Raritan Bay Gateway towns, they have always been dumps I wonder if they come back greater than they were as the dispalced locals may choose to stay displaced.

  40. Juice Box says:

    Brian most of Seaside Park is fine just no gas, electric or water, it will be back on in a few months. My coworkers rental house in Seaside Park did not even get sand inside just in the yard.

    Apparently there were a few hold outs who refused to evac even though there were no utilities. An Ocean County Judge, a councilperson and a crazy person.

  41. Comrade Nom Deplume says:

    Time to head into the bubble. Happy Thanksgiving everyone.

  42. Bozo the Clown says:

    Where in the world is JJ? I’m having withdrawal symptoms.

  43. 3B Buying says:

    #43 What bubble?

  44. Nicholas says:

    On the topic of areas that didn’t recover from disasters…

    HIRONO, Japan—It has been more than a year since the evacuation order was lifted in this town near the Fukushima Daiichi nuclear plant, site of one of the worst environmental disasters in history, but Hirono Mayor Motohoshi Yamada still longs for the sound of children’s voices.

    Hirono is within a 30-kilometer radius of the plant that experienced a triple meltdown in March 2011, triggered by the one-two punch of an earthquake and tsunami.

  45. adavs says:

    Brian-We were down in South Seaside Park and Seaside Heights this past weekend, we own properties in both towns. Seaside Park is relatively untouched. Lots of sand that is already being moved, the boardwalk is mostly intact, and not as much debris on the curb as you’d expect. Seaside Heights is in similar shape with exception to the north end that borders Ortley. The SSH boardwalk is almost completely gone, but with exception to the 2 piers, the buildings are in pretty good shape. We spoke with the owner of the Clam Bar and Jimmys Breakfast and they both sustained little damage and only minor water. Our SSH rental right on Ocean Terrace had no damage of any kind, even to a 3/4 basement that was dry. Word on the street is that most of the businesses will return and only a 10%+/- loss to rental availability. It will be interesting to see how this plays out come Memorial Day.

  46. NJCoast says:

    Except for one abandoned ranch we called the rat house on the oceanfront in Deal collapsing there was no damage to homes in Allenhurst and Deal but for some roof shingles missing and a few trees down. Both towns are perched on bluffs. There’s a reason many homes there are over one hundred years old. I was getting real time pictures of the storm from my oceanfront friend who never left her huge picture window facing east. Over 100 year old stucco house with Spanish tile roof, nothing moved.

  47. Libtard in the City says:

    I worked in South Central. It wasn’t much better before the riots then it was after. Our plant there installed barbed wire around the parking lot. Been through Watts many a time as well. The bad parts of Los Angeles are nothing compared to East Orange, parts of Irvington, Vailsburg Newark or any of Camden.

  48. Statler Waldorf says:

    Has JJ been carried off by one of Sandy’s waves, washed up on a desert island with three bikini models?

  49. The Original NJ ExPat says:

    JJ’s town very badly hit, he lives in a flood plain, and has no flood insurance. Check out video:

  50. Bozo the Clown says:

    JJ’s town very badly hit, he lives in a flood plain, and has no flood insurance.

    Given the number of good trades he’s had, he’s entitled to one lousy one. Unfortunately, this might cost him hundreds of thousands.

  51. Libtard in the City says:

    Apparently, JJ’s house drifted out to sea. It eventually hit ground in Bermuda almost completely intact. Here’s a photo he sent me. Though, I really don’t recommend you order anything containing onions.

  52. scribe says:


    One part of Seaside was completely spared because of a 20-foot dune. Water went around it – people were amazed when they got home and no damage. I will see if I can find the video clip from one of the NJ papers.

  53. 1987 condo buyer says:

    Grim, your welcomed!

    “The township’s ability to secure gasoline during the shortage was another high point, said Tucci. At one point or another, Verona, Wayne, Caldwell and Essex Fells all turned to Cedar Grove in order to keep their emergency and police vehicles on the roads in the storm’s aftermath.”

  54. scribe says:

    Midway Beach in Seaside – spared

  55. Anon E. Moose says:

    Happy Thanksgiving to Grim, all the regulars (including Dope & Sx), and all your respective families. Thankful to have NJRER to make things interesting.

  56. relo says:

    30: It’s for the children.

  57. Essex says:

    Well I am glad that we never had to make a major insurance claim. If the figure that Allstate came back with to fix our place is any indication, there are some lowballs flying in NJ.

  58. Juice Box says:

    A coworker of mine told me today his brother who recently purchased a bungalow
    in Point Pleasant Beach lost everything about 2 1/2 ft of water in the house. He is starting cleanup this weekend. His plan is to raise the house and build a new one in it’s place. Apparently even with the purchase he has enough cash to build a brand new house, it will push his investment north of 800k. I wonder how many others out there will be doing the same? He is mid 50s and planned on retiring down there once his pension kicks in. It is going to be interesting to see if they will allow him to build a new home in the same footprint only a few feet above ground level or will the game change like LBI where the new beachfront homes the upside down homes need to be raised up where the first floor is just stairs and a utility room.

  59. Ernest Money says:

    It is the hour for the twilight of the gods to commence. Final doom is nigh.

  60. Ernest Money says:

    Actually, final doom is my aunt’s brussels sprouts.

  61. Ernest Money says:

    Stuff yer pie holes full of food, and tell yourselves it could be worse.

    It can’t get much worse (although I’m probably wrong on that)…unless you’re a white Amerikan in Afghanistan.

    God bless Amerika? Yeah, right.

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