Here are some of the ways Hurricane Sandy will impact real estate sales across the north east.
Mark C. Olsen/Reuters
Damaged real estate can't be sold. Whether homes were currently on the market or are in the middle of foreclosure deals, the damage done by Sandy has to be addressed before any real estate deals can proceed. This will entail homes being pulled off the market and buyers backing out of contracts with homes that have since been damaged. According to Core Logic, Inc., a mortgage software and date firm in Irvine, here is a state-by-state breakdown of the potential property values that were in the path of the storm:
- New York - $35.1 billion
- New Jersey - $22.6 billion
- Virginia - $11.3 billion
- Massachusetts - $7.8 billion
- Maryland, Delaware, and Pennsylvania: $11 billion
The World According to Fannie and Freddie
In the meantime, many of the damaged homes have mortgages which need to be paid. Freddie Mac issued a statement yesterday which authorized loan servicers to suspend foreclosure procedures for as many as 12-months for states/properties which suffered storm damage. Freddie also stated that upon review, it will allow some on-time borrowers to defer their mortgage payments for up to a year - this will include waiving their late fees - while owners recover and address storm-related property damages.
Fannie was also generous, urging servicers to issue extensions, deferments, and other helpful allowances for home owners whose properties were affected. Fannie Mae's borrower guidelines include disaster-relief allowances which include a 90-day window for deferred and/or reduced payments, depending on the situation.
This is where it gets especially ugly. Hurricane Sandy took an already dismal foreclosure situation and made it worse. In fact, using the current pace of foreclosures in New York and New Jersey, combining current foreclosure lists and prospected storm-related foreclosures, it will take as long as 425 months - or a whopping 41 years - for the foreclosure situation to be ironed out. Hopefully this situation will create solutions to make the process of buying and selling foreclosed properties more efficient.
And in California?
Just a week before Hurricane Sandy, California was helping to lead the nation out of the real estate crisis. Hopefully, that real estate trend will continue.