When Hurricane Sandy hit New York City, real estate watchers could hardly discern what kind of lasting impact it would have on the residential market. A year later, it’s clear that waterfront Manhattan sales and rentals bounced back quickly, while parts of the outer boroughs are still suffering from sluggish trades, according to a new report by real estate listings database StreetEasy.
“For Manhattan buyers, Sandy was a blip,” said Sofia Song, head of research and communications at StreetEasy. “Residents and sellers may have been displaced temporarily, but the damages were done to the buildings, to lobbies and other common areas. The outer boroughs just had a much longer road ahead of them.”
Immediately after Sandy struck on Oct. 29, 2012, the number of contracts signed for homes in the coastal neighborhoods of Manhattan plummeted 24 percent over the previous year, to 53 from 70 contracts, the report shows. However, by April, the “resilient” market rebounded, with 125 contracts signed, a 28 percent year-over-year increase, the report said.
Some 353 sales closed in the borough in the fourth quarter of 2012, up 64 from 289 sales the previous quarter, the report shows. However, many experts attributed the spike in fourth quarter sales to fears about tax code changes on the eve of the fiscal cliff.
Ariel Cohen, a broker at Douglas Elliman, told StreetEasy that he sent out four contracts for Financial District deals following the storm, and one buyer pulled out. “But November was followed by a period of insane activity,” he said.
Prices also bounced back to almost pre-Sandy levels. Currently, the median closing price of a home in Manhattan’s flood zone 1 and 2, which cover the Financial District, Tribeca, the East Village, Chelsea and part of Harlem, among other areas, is $976,000, a 5 percent decline since Hurricane Sandy, the report said.
However, although prices in areas like Tribeca continue to skyrocket, closings in the neighborhood are currently down by 30 percent year-over-year, to 107 closed sales in the third quarter of this year from 153 closed sales in the third quarter of 2012.
That strength translated to the rental market as well. Median asking rents in the coastal areas of Manhattan dropped by just 2 percent year-over-year, to $3,298 per month in November 2011 from $3,248 per month following the storm.
However, the bounce back in rental inventory will be the true determinant of whether the Downtown market has recovered, according to broker Ryan Serhant of Nest Seekers International. This past year, 9 percent fewer rental listings came on the market in the coastal areas of Manhattan, StreetEasy found, compared to a 16 percent increase in listings in the rest of the borough.
“Inventory will tell the story,” Serhant told StreetEasy. “You saw a lot of rental properties come off the market. You saw all this delisting activity in the immediate aftermath because logistically it was difficult to move in the wake of the storm.”
Meanwhile, residents in some parts of the outer boroughs are still struggling to rebuild homes and infrastructure; unsurprisingly, that has had an effect on the market.
In Brooklyn, closings dropped 22 percent in the aftermath of the storm, to 226 in the fourth quarter of 2012 from 289 the previous quarter. In Queens, the drop off was sharper, to 101 closed sales in the fourth quarter of 2012 from 144 closed sales in the previous quarter, a decline of 30 percent, the report shows.
And in hard-hit areas like Breezy Point, Queens — the site of a massive fire after Sandy — closing prices are down 29 percent compared to pre-Sandy figures, to $240,000 in the third quarter of this year from $339,000 in the prior year quarter. In flood zones 1 and 2 of Staten Island, the median closing price of a home is $267,000, a 24 percent decline since the storm, according to the report.