How Sandy's Aftermath Can Help Homebuyers
According to the Oakland, Calif.-based economic forecasting firm Eqecat, Sandy will result in anywhere between $30 billion and $50 billion in financial damages, most of it in New York and New Jersey.
Eqecat had low-balled the financial damage to between $10 billion and $20 billion before the storm hit land, but upped its estimate after extensive structural damage was seen in New York City, the nation's financial center. There, subways and tunnels were flooded, massive power outages were widespread and businesses closed for up to five days.
Down the line, Eqecat expects New York, at 34%, to absorb most of the financial losses from to the storm, with New Jersey (30%) and Pennsylvania (20%) close behind.
There's not much of a silver lining amid the carnage wrought by Sandy, but one real estate analyst says Sandy could be a "catalyst" for lower interest rates. That could help borrowers seeking credit, although it would hurt bank savers, who are getting grimly accustomed to lower interest rates.
That analyst is Barry Habib, chief market strategist at Residential Finance , a Columbus, Ohio-based real estate service firm.
Habib cites the most recent U.S. Bureau of Labor Statistics jobs report, released Friday, as a harbinger of lower rates. But the rolling thunder brought by Sandy could really grease the skids, he says.
"It was a pretty good jobs report, however when you look at the average workweek and the hours worked on a weekly level, you are seeing a decline in the amount of income," Habib says. "While a report like this would normally lead to higher interest rates and better stock prices, that isn't happening today. In fact, we are seeing the reverse, where the rates are very modestly improving and the stocks are declining. The reason is probably on the stock side, due to the fears of the impact of Hurricane Sandy, which will clearly have some negative impact on the economy, and there is some anticipation of that happening."
Much of his reasoning for lower rates in the wake of Sandy is the Federal Reserve and its ongoing bond market stimulus program. Habib says any inclination to pull back on economic stimulus will go by the wayside now that Sandy has hit the U.S. east coast.
"Part of the reason why bond prices are improving due to this news points to two things: We already know the Fed are buying mortgage bonds, which is helping