If you were wondering, a massive, multi-day blackout and unprecedented flooding only briefly made people not want to live in Lower Manhattan. The rest of Sandy-ravaged New York, however, is faring more poorly.
Real estate website StreetEasy.com analyzed real estate listings and sale prices for three quarters surrounding last year's massive storm. What it found will surprise only those who are not familiar with the hyperactive real estate market in the city.
The transaction volume for Manhattan properties in Zones 1 and 2 increased at a considerably faster rate than properties in other zones. Immediately following Sandy, there was a 64% increase in the number of closings compared to the prior year, while other zones in Manhattan experienced a 41% increase. In the intermediate and long terms, closings for Zone 1 and 2 properties increased by more than twice as much as properties in other zones. Median closing price in Zones 1 and 2 jumped 23% by the intermediate term driven by the intense spring selling season.
Emphasis added. Those zones are depicted in the map at right. Zones 1 and 2 — red and orange — are the areas most likely to flood in the event of a storm; during Sandy most areas in each zone did. In fact, the map displayed is the updated map created after the superstorm in an effort to provide better guidance around flood risks.
Yet those obvious risks — really, deeply obvious — didn't faze buyers. Below, a look at how year-over-year listings changed in Manhattan in the aftermath of the storm.
Change in number of closings
Change in listing price
In every quarter — the one right after Sandy, this spring, and this fall — listing closures increased more in the most flood-prone parts of Lower Manhattan than in the rest of the city. While prices dropped in the year-over-year quarter right after the storm, they bounced back strongly in the second quarter of this year, up dramatically over the same period in 2012.
Again, that's only Lower Manhattan, where most housing wasn't significantly damaged and the power outage could be seen as a fluke. In the most heavily damaged (and generally less in-demand) parts of the city, prices and sales plummeted. Everything near the water saw lower prices and fewer sales — except for prices in Coney Island.
It's not only because of the flooding that buyers may avoid the coastline. With recent revisions to the Federal Emergency Management Agency's flood maps, homes in areas adjacent to the shore are likely to see the cost of mandated flood insurance increase dramatically, unless legislation is passed to prevent it. Those increased insurance costs, though, are meant to internalize some of the risk of living in an area that, as we've seen, is prone to damaging floods.
For New York renters, the real estate situation was different. A broker at the firm Douglas Elliman outlined how to StreetEasy: "Renters were put in a 'take it or leave it' situation since... inventory was so low. The next renter was waiting in line and wouldn’t make a fuss about storm damage or zone designation." If those sadsack renters want to avoid spending every hurricane season pumping floodwater out of their windows, there's a simple solution: Just scrape together the $1.1 million that your average Manhattan property went for this summer, and move.