Waterfront Luxury Real Estate Rebounds After Sandy
ROCKAWAYS — Lisa Jackson, owner of Rockaway Properties, moved to Carroll Gardens in late 2012 after Sandy walloped her Queens neighborhood, planning to switch gears and restart her business selling homes in Downtown Brooklyn instead.
But two months after relocating, her phone started ringing with inquiries about sales for oceanfront property in the Rockaways.
She's now back in Queens — and is busier than ever.
"I closed over 30 homes after the storm and have another 20 under contract," Jackson said.
Many homeowners in Sandy-affected areas are still struggling to rebuild, and housing advocates are bracing for a wave of foreclosures. But the real estate market in million-dollar neighborhoods such as Neponsit and Belle Harbor in the Rockaways, and the Financial District in Manhattan, are back in demand, according to brokers.
The threats of rising sea levels, future storms and soaring flood insurance costs don't seem to be deal-breakers for many prospective buyers.
"There was this idea that with Sandy, and the stigma, that no one would want to live on the waterfront ever again, and that’s not reality," said real estate expert Jonathan Miller. "Proximity to water will still have value."
In the Rockaways, the boardwalk has yet to be rebuilt, but that's hard to tell from recent sale prices in the neighborhood, where rehabbed homes are selling for only 10 percent less than they were before the storm.
Prices for distressed homes remain down between 30 and 40 percent, according to real estate agents.
Meanwhile, in the Sandy-affected Financial District the median price for condos in the third quarter was $970,000, up 16 percent from the year before, according to data from Miller Samuel Real Estate Appraisers.
"If there were any deals to be found it was November and December," Rutenberg Realty's Wei Min Tan said of the Financial District, where he recently sold a one-bedroom with a 500-square-foot terrace for the full $1.28 million asking price at 99 John St. — a building that had closed for a few days after the storm.
Robin Shapiro's real estate firm in the Rockaways has 31 properties sold or under contract since the storm.
"I literally was so shocked [the market] just went crazy," she said. "I was a little conscious of not advertising I was doing so great. I don’t want to make money on someone’s hardship — that they’re selling or don’t have the money to do the improvements."
Shapiro said buyers recognize that some post-Sandy rehabbed homes "are actually better than ever."
"They all have these new boilers, new electrical work and heating and cooling systems," she said.
"The prices, yes, are down," she said. "But they are down only because the neighborhood is down."
The median sales price in Rockaway was $375,000 in the third quarter, down 10.7 percent from last year, according to a recent Douglas Elliman report. The number of sales also dropped nearly 53 percent to 44, the report said — although brokers say they have many properties in contract now.
These sales are taking place even in the face of uncertainty about insurance costs — which are expected to rise, although it's virtually impossible to pinpoint exactly how much.
Experts say rates are likely to climb as the federal government, which had been subsidizing many flood insurance plans in the area, changes the way policies are calculated. Properties in high-risk areas, for instance, could see their premiums spike if they don't physically raise their properties by a certain amount above the floodplain — not an easy thing to do for many multi-family homes in the city.
"FEMA has yet to release a usable tool or website that will show you how much your premium will go up," said Matthew Hassett of the Center for NYC Neighborhoods."It's very complicated. You need to be a FEMA actuary to figure out what your premium will be in five years."
New FEMA flood maps that will be adopted shortly — in which thousands of new properties will now be considered in the floodplain — are expected to increase owners' insurance premiums from an average of $430 to $5,000 to $10,000 per year, according to a study released last week from the Bloomberg administration, which called on Congress to hold off on implementing the insurance reforms.
"This is the time that people need to know that information: Do I use money for rebuilding? If I’m not investing in the elevation, I may have to sell anyway, but my property value will go down," Hassett said.
And with new rules regarding construction in flood-prone areas — such as a rule that mechanical equipment must be above the floodplain, not in basements — some developers are going above and beyond what's required to create buildings they hope will be almost impervious to big storms.
"This is a new reality. Best construction practices have changed," said Rob Singer, the project manager for Time Equities' 63-story building set to rise at 50 West St., near the World Trade Center, by 2016. "The buyers understand what’s going on. You can’t hide from this."
This high-end building will have its main mechanical room on the sixth floor, 90 feet above ground, and an oversized generator on the fourth floor running on natural gas — rather than having a tank connecting to it, Singer explained. (Natural gas still worked during Sandy.) The generator, which will power elevators, halls, fire pumps and security systems, will enable residents to have working refrigerators and be able to charge their cellphones in the event of another Sandy, he added.
There will also be a flood-gating system, with sheets of metal that will act as a physical flood barrier. The ground floor of the building has been raised as another layer of defense.
"I think this new crop of buildings that incorporates the latest will be seen as a premium," Singer said. "We’re going to brag about it. We do want the community to know it’s going to be a beautiful tower and as stormproof as technology allows for."