Hurricane Sandy affects housing on a national levelby Peter Miller
While the full cost of repairs and replacements is currently unknown, early estimates claimed that the storm would cause $10 billion or $20 billion in damages. Those estimates are plainly understated. Hurricane Sandy’s damage is so enormous that it will impact the entire national economy.
Hurricane Sandy takes down applications
Last week, the Mortgage Bankers Association reported that loan applications fell 5 percent nationwide. This loss was not the result of higher mortgage rates or a holiday break, the decline is linked directly to the storm.
“Last week’s storm had a significant impact on application volumes on the East Coast,” said Mike Fratantoni, MBA’s vice president of research and economics, in a statement. “Applications fell more than 60 percent compared to the prior week in New Jersey, almost 50 percent in New York and nearly 40 percent in Connecticut. Other East Coast states also saw declines over the week, while many states in other parts of the country had increases in application volumes.”
What else will Sandy destroy?
It would not be surprising to see additional standards of real estate activity impacted by Hurricane Sandy. For instance, we could see fewer home sales and lower real estate values nationwide because of the damage done along the East Coast, especially in New York and New Jersey. These coastal states have dense populations, and therefore any change to the local markets can impact national statistics.
HUD has already announced various forms of help for residents of New York, New Jersey, Connecticut and Rhode Island. Sandy’s victims can now get 100 percent FHA financing. Also, HUD has instituted a 90-day foreclosure moratorium for FHA borrowers who had been facing the loss of their homes.
With the election now over, there is more work to be done. Large numbers of homes will need new mortgages for rehabilitation, and if New Orleans is any example, thousands of properties will have to be replaced. Temporary housing is also an issue. By some estimates, 20,000 to 40,000 households have been displaced.
Expect a hiccup in housing statistics for some time to come.