“The future ain’t what it used to be.” For those unaware, that is a quote from Yankee legend Yogi Berra. He may have been talking baseball, but truer words could not be spoken in reference to the real estate market following Sandy, which has affected nearly its parameters.
There is always an ounce of faith needed to predict outcomes. You can do the research, create models and estimate occurrences. Hell, economists and weathermen do it for a living. But there are unforeseen wild cards and the hurricane in late October was one of them.
In my last column I indicated a positive outlook for Long Island’s real estate market in 2013. Based on the input of seasoned experts, this year was to be one of recovery. But that was before Sandy.
It’s not all bad. The holiday season is traditionally slow for real estate, so the lull from the storm’s aftermath was cushioned by the low expectations for the period. Obviously the damage created by the storm will be a strong shot in the arm for the home improvement industry, too, which has lagged.
In Sandy’s aftermath the lessons learned will hopefully impact building codes, which should be examined to help avoid the same level of damage from future storms. Cost benefit analyses to increase efficiencies in emergency situations, increase safety and limit exposure should be discussed.
Housing prices may drop in flood-prone areas, which could lead to waterfront deals if you believe Sandy was a 100-year storm and that climate change is a bunch of hot air. There may also be a demand shift towards areas farther in from the coastline, which could drive prices up.
There are questions as to whether the cost of flood insurance—and insurance in general—will increase or even be available. FEMA initially indicated that current demand for policy payouts is expected to exceed the funds available by about four times. It will be interesting to see how this program changes in terms of cost and availability.
There is no doubt that Sandy will change the direction of development on Long Island. The only question is how. The coming year will require reflection, cooperation and, most importantly, action from both the private and public sectors if we are to nurture real estate’s recovery. As Berra said, “When you come to a fork in the road…take it.”