NYC's Real Estate Market Continues to Feel Sandy's Effects
The last time lower Manhattan faced adversity was post-9/11, but the area recovered due to incentives to create new housing. "But the question now facing downtown New York is whether the hurricane stigma is just a short-term phenomenon, or will persist into the long term as well," says Barrionuevo. "Insurance costs are sure to rise, and lenders could become tougher on the area, mortgage brokers say, putting a damper on one of the great real estate stories in the country over the past decade."
A slew of deals to buy apartments in or near lower Manhattan have fallen through because potential buyers "thought that all of New York had succumbed to devastation," said broker Ryan Serhant, or "because of the storm they are not interested in this area anymore," said broker Frederik Eklund. A bigger issue, said Melissa L. Cohn, yet another broker, is that people who still want to buy buildings damaged by flooding cannot close deals until repairs are made, but "[n]o bank will finance in a building that has had storm damage."
"Lower Manhattan has had momentum lately, especially at the higher end of the market, where developers have been trying to cash in on the proliferation of superwealthy buyers flocking to New York," says Barrionuevo. "To compete with uptown, downtown developers have been fashioning megamansions and megapenthouses with large outdoor spaces and rooftop pools." These newer buildings have taken longer than older ones to be restored, and residents have been told that they will not be able to move back in for at least a few more months. Real estate brokers are concerned that the momentum has slowed down in Sandy's aftermath and that prices may be recalibrated to a lower level.
"Everyone, it seems, is sweating the potential for higher costs," concludes Barrionuevo. However, housing inventory in Lower Manhattan has generally been low, and while it may take time for the storm stigma to wear off, "it's hard to deny the appeal of waterfront property, especially in a city like New York." Cohn agrees, "People will come back downtown. If the property is priced properly, then they will be there."