— As homeowners along the Eastern seaboard assess the damage done by Hurricane Irene, they may have to brace themselves for more bad news.
The hurricane is likely to roil an already uncertain real estate market in communities from North Carolina to Vermont, where residents have already seen their homes severely damaged or even destroyed.
Experts say the storm could delay pending homes sales and, in the longer-term, potentially depress home values. For homeowners teetering on the brink of foreclosure, the devastation caused by Irene could be a deciding factor in losing their homes. Insurers say total damages from the storm could be between $7 and $10 billion, according to published reports.
"There's so much downward momentum in the real estate market that this is just one more straw on the camel's back," said William Harrison, a faculty lecturer at the Moore School of Business at the University of South Carolina. "The Northeast just had the hell scared out of it and fear has a way of translating into lower home prices."
Harrison said that for many years the East Coast has viewed itself as "hurricane proof" and that home values could decline as much as 10 percent if the public's perception that living in these riverbank or beachfront communities pose too much risk. He added that any declines in values won't be reflected in national data for another six months and it usually takes several years for prices to recover.
Another concern Harrison cited is the impact the storm can have on homeowners on the verge of foreclosure.
"If a homeowner's mortgage is already underwater, they've sustained $25,000 in damages, and they're storm deductible is only $10,000, this could be what puts them over the edge," he said.
Some insured homeowners may not have policies that cover the full cost of the damage. That could pose challenges in paying for repair or rebuilding costs.
Banks may also face a tough time in processing home foreclosures. Bank-owned property that is badly damaged and unoccupied could delay the process, according to Harrison.
Home sales that are about to close could see delays that last days, weeks or even months depending on the extent of storm damage.
Bridgette McGee, a loan officer at Allied Home Mortgage Corporation in Baltimore, Md., said at least ten of her properties in Baltimore and surrounding neighborhoods face possible closing delays due to the storm. Baltimore wasn't even one of the harder hit cities, but homes in the areas seeking funds from the Federal Emergency Management Agency (FEMA) may be asked to submit to additional inspections.
"Lenders are being cautious so they're requiring re-inspections before moving forward," said McGee, who has not received any serious damage reports from her clients. "Major damage could affect the marketability of a house and if there's property damage people might start to look elsewhere."
McGee said that in Maryland most of the damage reports have focused on temporary power outages and fallen trees, but that the communities devastated by Irene could see their home sales dramatically impacted in the coming months. Homeowners may be asked to sign affidavits attesting that their home values are the same as when they were previously appraised.
Obviously, on the East Coast, many homeowners will not be able to make that claim.
Pauline Liu, a coffeehouse owner in flood ravaged hamlet of Arkville, N.Y., said that a neighbor whose house was badly storm-damaged is living in a mobile home in her shop's parking lot and that there are "far worse homes than his."
Michael Ricci, 58, a homeowner in Woodstock, Vt., sustained damaged to his property, but his home, which is 30 feet above the Ottauquechee River, was spared. Ricci and his wife Karen watched the river spill over the day of the storm and miss flooding his home by about two feet.
"We have no water, intermittent power, but many houses in our town were destroyed, Ricci said. "Right now we have a ten by fifty foot pile of rubble in our backyard and unfortunately in that pile are pieces of other people's homes. Even during the storm we realized how lucky we were."