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November 8th, 2012

Hurricane Sandy affects housing on a national level

by Peter Miller


Housing Market Trending DownHurricane Sandy is hardly making national headline anymore, even though this destructive weather event took place less than two weeks ago.

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.

3 Responses to “Hurricane Sandy affects housing on a national level”

  1. Matt Says: November 8th, 2012 at 12:19 pm

    Good Post! Although the relationship between housing sales and the Hurricane maybe a clear possible connection the tie results more than likely to an increase in building materials. This could alter the construction of new homes across the country and potentially increase the cost of housing across the country. As for the local market it is important to understand the total damages that took place before real speculations can be made. Although the statistics are skewed because people are uncertain about the market, but all these problems are very limited short term problems. Thanks!

  2. Securitization Audit News Hurricane Sandy affects housing on a national level | HSH Financial … | Securitization Audit News Says: November 9th, 2012 at 11:02 am

    […] here to see the original: Hurricane Sandy affects housing on a national level | HSH Financial … Filed Under CIA, homebuyers, housing, mortgage rates, Securitization This entry was tagged […]

  3. Polly Says: November 10th, 2012 at 9:23 am

    That’s the bad thing about what’s left after the storm. Homeowners will have to build everything from scratch especially their houses as they don’t have a choice but to rebuild it. Thank you for sharing this information

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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