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Storm damage to housing industry could be far-reaching

I've been asking those in the know today whether Hurricane Sandy might affect the noticeable recovery now under way in the housing market.

Storm damage to housing industry could be far-reaching

Mountains of sand are plowed along 83rd street in Long Beach Twp. Wednesday, October 31, 2012 in the aftermath of Hurricane Sandy on Long Beach Island. ED HILLE / Staff Photographer
Mountains of sand are plowed along 83rd street in Long Beach Twp. Wednesday, October 31, 2012 in the aftermath of Hurricane Sandy on Long Beach Island. ED HILLE / Staff Photographer Ed Hille / Staff Photographer

I've been asking those in the know today whether Hurricane Sandy might affect the noticeable recovery now under way in the housing market.

Jed Kolko, chief economist for the real estate search engine Trulia, said that a significant part of the economic impact of major hurricanes like Sandy is damage to homes and other buildings. 

"There will be an urgent need for construction to repair damaged buildings and other infrastructure," he said. "Rebuilding after disasters typically adds to economic growth, which will provide jobs for construction and repair workers at the same time as people are struggling to rebuild their homes or find a new place to live."

Kolko and others believe that Sandy will delay the construction of new homes in the areas affected, which is what happened in the aftermath of Irene in August 2011. Kolko believes that because Sandy is coming later in the year and is being forecast as more severe than Irene, the decline in new-home building "should be sharper and last longer -- possibly pushing some building to next year to avoid the winter.

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Here's something else. Sandy's path will take it through some expensive and tight housing markets of the Northeast and Middle Atlantic. where cities and their suburbs have few vacant homes to begin with, so renters or owners who lose their homes will struggle to find a new place to live.

"If the hurricane delays construction of new rental units already underway, or damages a significant number of existing rental units, we could see rent increases accelerate," Kolko said.

About this blog
Alan J. Heavens Inquirer Real Estate Columnist