NEW YORK Nov 29 The regional housing market
should see only a small impact from the fallout from the massive
storm that hit the U.S. Northeast last month, though
delinquencies in hard-hit areas could rise, the New York Federal
Reserve said on Thursday.
About 300,000 New York homes were damaged or destroyed by
Superstorm Sandy, while about 70,000 were hit in New Jersey, the
New York Fed estimated. Still, that's a relatively small slice
of each state's real estate market, accounting for about 4
percent and 2 percent of housing stock, respectively.
"Chances are (the impact) is going to be relatively small,"
Jaison Abel, senior economist with the Fed's research and
statistics group, said during a press briefing.
A temporary dip in home prices and sales activity is usually
seen following severe storms before the market rebounds, the Fed
said. If enough homes are destroyed, prices may rise immediately
as there are fewer homes to meet demand.
However, there could be an increase in delinquencies in some
areas, particularly for homeowners that weren't adequately
insured or were upside down on their loans - their homes worth
less than their mortgages.
"If a house is suddenly severely damaged or destroyed ...
that can really start to alter the decision by the household in
terms of what they should decide to do," said Joseph Tracy, the
New York Fed's executive vice president.
"So we may see some localized pressures on delinquencies."
New York and New Jersey are already plagued by a large
backlog of foreclosures that have yet to be processed, an issue
flagged by the Fed as a significant challenge to this year's
stabilization in the housing sector.
How long it takes to foreclose on a home has particularly
increased in states - including New York and New Jersey - that
process cases through the court system.
Sandy made landfall in New Jersey on Oct. 29, wreaking havoc
in the Northeastern United States and killing at least 121
New York Fed President William Dudley said in a speech
earlier in the day that the storm would likely shave 0.25 to 0.5
of a percentage point from economic growth in the fourth