Hurricane Sandy's Impact on National Real Estate
October data, despite the serious and tragic impact of Hurricane Sandy, are largely positive nationally. Today we look closer at the month behind us, and speculate on months to come.
The current supply of homes was the lowest national number since February of 2006 this October. So, in a nutshell, America’s inventory of homes for sale continues at its historical low, which though frustrating to buyers, acts as a positive indicator for real estate. Here’s an example of how this works: If we only have one house for, say, every 20 buyers, both sales and prices can go up as buyers react by bidding competitively and moving quickly on each listing. And indeed, nationally both existing home sales and prices went up again in October of 2012.
Existing Home Sales
The NAR reports that completed transactions for single-family homes, condos, townhomes and co-ops combined rose 2.1% from this September and 10.9 of October, 2011. Many of these transactions had already closed prior to Hurricane Sandy touching down in the east, so the storm’s impact doesn’t fully show yet. However, given the fact that Hurricane Sandy literally wiped away entire neighborhoods, particularly in the New Jersey area, we should expect a lag in sales in coming months as hard hit regions focus on repairing, rather than selling, existing homes.
Forbes reported in early November that along the East Coast, home sales are likely to trend downward in coming months. “Pending sales will be delayed or in some cases collapse altogether as lenders insist upon new appraisals in areas battered by Sandy.” The result will have noticeable impact on national sales statistics in late fall and early winter, which of course s slower sales season anyway.
Here too, October 2012 welcomed higher numbers as NAR data show the median housing price (for all housing types) rose 11.1% over October, 2011. Lawrence Yun , NAR chief economist, said that "rising home prices have already resulted in a $760 billion growth in home equity during the past year. Given that each percentage point of price appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year."
Again, because the storm came after some of these figures were collected, Hurricane Sandy’s legacy on home prices won’t be obvious until the close of November, and then on into the coming months as recovery progresses.
Homes don’t linger in hot markets, a truism showcased by the fact that October’s median figure for days on the market was down 26% from October, 2011. 32% of homes sold in October were on the market for less than a month. These data point to a competitive market.
The NAR figures show that first-time buyers were still an important force this October, accounting for 31% of home purchases this October, down slightly from 34 % in October 2011. Meanwhile, all-cash sales accounted for 29% this of this October’s real estate transactions, which is an exact match with last October. Because these figures are fairly stable, they are likely to do so going forward into 2013. The number of sales may decrease, but the people who buy and how they buy will be similar, so Hurricane Sandy will have too much impact in this area.
New housing construction has enjoyed an uptick this year, and the hurricane could have a dampening effect on that as the focus turns to rebuilding, rather than building new. However, remodeling too requires labor, and as homeowners whose homes were damaged hire out the repairs, contractors get back to work.
“It’s bad news for homeowners, but it’s certainly an opportunity for workers who have survived a very down housing market to get back to work,” says Robert Denk, an assistant vice president of economics for the National Association of Home Builders.
Overall, though the physical storm has passed, we haven’t seen the worst of Hurricane Sandy when it comes to its effect on real estate. Let’s hope for a speedy recovery for everyone, and everything, impacted by this disaster.
- Photo Credit of Jersey Shore: Wikimedia Commons as shown on Free Beacon.com
Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert