March 11, 2013

Sandy-damaged homes hit market at bargain prices

Buyers are wading into a host of potentially expensive uncertainties about new flood maps, future insurance rates and updated building codes.

By EILEEN AJ CONNELLY/The Associated Press

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This Oct. 30, 2012, file photo shows an aerial view of the damage to the shoreline and the houses in Mantoloking, N.J., the day after Superstorm Sandy. A rising number of homes damaged by Sandy are hitting the market – ranging from 10 percent off pre-storm prices for upscale homes in New York's Long Island and the Jersey Shore to up to 60 percent off modest bungalows in Staten Island and Queens – but it's very much a game of buyer beware.

Air Force Master Sgt. Mark C. Olsen via The Associated Press

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A storm-damaged beachfront house is shown in the Far Rockaways section of the New York City borough of Queens in January. Homeowners shaken by their Superstorm Sandy experience are putting their homes on the market, sometimes for rock-bottom prices.

2013 File Photo/The Associated Press

Still, that sort of cut might make the neighborhood affordable for a family that was priced out in recent years, when houses were selling for $750,000 and more.

And in one sense, buying a storm-damaged home can offer an advantage, said Tom Tripodi, president of the Tripodi Group/Douglas Elliman Real Estate in the Long Island city of Long Beach, where damaged houses are selling for about 10 percent less than before the storm.

"If it's all gutted out, you can do what you want," he said. "You can own the house with a brand-new kitchen, new appliances, new floors."

In addition to people looking to create their dream house out of a damaged home, Tripodi has seen investors eyeing the area. In Long Beach's West End neighborhood, for example, investors are looking to tear down gutted 1920s-era ranch homes and build bigger houses with multiple stories at higher elevations in their place.

The shorefront sections of Staten Island are also seeing accelerating turnover of homes that are likely to eventually get torn down.

Lee Venezia, a broker with Neuhaus Realty Inc., recently sold three adjacent bungalows owned by a longtime resident of Staten Island's Midland Beach for $240,000 cash – about $20,000 less than each one might have garnered before the storm.  "The homeowner refused to go back," she said.

The buyer will fix the properties up and rent them "until the dust settles," Venezia said. Once new flood maps are finalized and new building codes sorted out, she expects the houses to be sold again to a developer who will replace them.

Cash deals are the only ones closing right now in Staten Island's storm-damaged neighborhoods, Venezia said, which means the buyers are almost all investors, even though the area's small houses are selling for $85,000 to $100,000. "Banks are not going to lend," she said. "The banks are waiting for the dust to settle to see what the building requirements are going to be."

The new flood maps must go through public hearings before they are finalized, a process likely to take two to three years.


Meanwhile, public officials and homeowners are trying to look to the future.

New York Gov. Andrew Cuomo recently announced a plan to buy out the entire Staten Island neighborhood of Oakwood Beach and allow the land to revert back to the marshland it once was, because the homes there have flooded multiple times. It remains unclear if any other neighborhoods might get bought out.

That may be the best hope for homeowners like Michael Kuhens, who has been trying to sell his bungalow in Staten Island's Ocean Breeze section, which was ripped off its foundation by the 14-foot storm surge.

A buyout would be attractive because, instead of dealing with bargain hunters, the state is offering pre-storm value.

"I know a lot of people in my neighborhood don't want to stay, and if they were offered a buyout they'd take it," said Kuhens, who is staying at his parents' house with his wife and 1-year-old daughter. "We just want to get on with our lives. It's a hundred-something days after the storm, and we're still stuck in limbo."

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