How much has the Real Estate Market been affected by Hurricane Sandy?

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How much has the Real Estate Market been affected by
Hurricane Sandy?
By Michael Lombardi for real estate investing | Jan 9, 2013




The aftermaths of Hurricane Sandy, the tropical cyclone that wreaked havoc in
October 2012 in some parts of the Caribbean, Mid-Atlantic and Northeastern United
States will be felt for a long time. Sandy has been the largest recorded hurricane in
the Atlantic. Twenty four states, particularly New Jersey and New York were
devastated by it in the form of flooded streets, tunnels, subway lines, long-period-
power cuts and rising number of fatalities. It has been preliminarily estimated that
losses in the U.S. alone could be more than $50 billion.

It will take a considerable period of time for normalcy to be restored to the affected
regions. The latest real estate news speaks of rebuilding the fallen structures along
the east coast; the costs to be incurred for which, will be quite dear indeed; to the
tune of more than $20.0 billion (Source: Bloomberg, October 30, 2012)! “Lowes
Companies, Inc. (NYSE/LOW)” and “The Home Depot, Inc. (NYSE/HD)” are stocks of
companies in the home and business repair market sector that will help towards the
achievement of the above goal by assisting the citizens and businesses that were
damaged by this nature’s fury.

The Home Depot, Inc. has been doing decent business since quite some time now;
the main reason being that the housing market scenario has been witnessing a
positive change. Sales of foreclosed homes are particularly seeing good days as the
number of investors that are purchasing these properties with a view to rent them
out are continuously rising. Revamping of such homes does cost a lot and hence the
home rebuilding market sector and stocks like “The Home Depot” have been seeing a
considerable increase in sales.
In comparison, Lowes Companies, Inc. has been exhibiting more volatility, though it
is also doing well. Both the stocks look to have broken their up-trends that were
since some time now. The shares of both the stocks had been both bullish as well as
optimistic from the investor’s point of view in the home rebuilding market even
before Sandy forced the closure of the stock exchanges.

As regards the housing market, it’s bottoming out looks clear enough and now it
seems to have found its footing at last. Thus this sector has certainly taken its time
to be on the path of recuperation; if ever so slowly. The stage looks optimistic for an
increase in building permits and housing starts. The home prices across the U.S. are
hopefully moving up. The month of August had registered a two percent increase in
the S&P/Case-Shiller Home Price Index, a figure that rose above expectations. This
made it the seventh consecutive month to see the index on the rise.

Recently, the real estate news was filled with reports on housing starts and building
permits. They spoke of 872,000 housing starts and 894,000 building permits; both
which beat estimates of Briefing.com of 765,000 and 815,000 respectively. The
corresponding upwardly revised estimates of August were 758,000 and 801,000
respectively. While the October readings are awaited, the home builders can still
expect some decent buying in the housing market, as is reflected in the
performances of many home builder stocks, for example, Toll Brothers Inc.
(NYSE/TOLL), which reported $0.36 per diluted share in its fiscal third quarter;
that was double of what was estimated ($0.18 per diluted share) by the Thomson
Financial consensus earnings estimates.

A lot of how the housing market will fare depends on the condition of the job market.
There were 158,000 jobs created in October, while the estimated figure for the same
by Briefing.com was 143,000. So the housing sector looks quite encouraging indeed.
It remains to be seen whether it will sustain and improve in the coming months. For
more news visit: www.investmentguidance.us