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        Sandy to boost construction jobs as storm spurs home repairs

        Date:Nov 5,2012

        Demand for construction workers and materials is likely to receive a boost as homeowners in coastal areas of New York and New Jersey rebuild after their properties were devastated by flooding and heavy winds.

        “It’s the most adverse way you ever want to see positive growth,” Tom Jeffery, chief hazard scientist for CoreLogic, said in a telephone interview. “But a high percent of damaged properties are going to be repaired.” CoreLogic, a real estate information service based in Irvine, California, estimated that 95,000 homes with a value of $40bn are located in the coastal areas hit hardest by Sandy.

        Insured losses from Sandy to onshore properties, including all types of commercial and residential real estate and items such as automobiles, will range from $7bn to $15bn, according to AIR Worldwide, a catastrophe-modeling firm based in Boston. Reis Inc, a New York-based research firm, gave a preliminary estimate of total property damage from the storm of $30bn to $40bn, countered by reconstruction efforts valued at $25bn to $30bn. “This nets out to around a $10bn to $15bn loss for the economy as a whole,” Victor Calanog, head of research and economics at Reis, said in an e-mail.

        Most homes in low-lying coastal areas are required to have flood insurance, which should cover much of the repair costs, Jeffery said. Federal and local governments have offered financial assistance to help uninsured property owners rebuild after other disasters, such as Hurricane Katrina in 2005 and last year’s Hurricane Irene, he said.

        Fannie Mae and Freddie Mac, which control more than half of all US mortgages, announced they were offering as much as one year of payment forbearance for owners of properties harmed by Sandy in communities designated national disaster areas.

        Almost 739,000 properties in Sandy’s path have negative equity of at least 25 percent, potentially giving owners of those homes a reason to stop paying the mortgage and be foreclosed upon, according to RealtyTrac Inc.

        US construction employment is still recovering from the last recession, with about 2.2 million fewer jobs today than the 2007 peak of 7.7 million workers, according to the Bureau of Labour Statistics. “We are likely to see localized spikes in construction employment throughout November and the winter as crews are mobilised to rebuild communities damaged by Hurricane Sandy,” Ken Simonson, chief economist for the Associated General Contractors of America, an industry trade group based in Washington, said.

        The total impact on employment from reconstruction work, however, “is likely to be minimal, as planned projects in hurricane-damaged communities are put on hold while people rebuild,” Simonson said. Housing and home-building, which led the US into the recession, have contributed to gross domestic product growth this year. Real residential fixed investment increased 14.4 percent in the third quarter, after an 8.5 percent gain in the previous three months, the Bureau of Economic Affairs reported October 26.

        Home starts jumped to an annual pace of 872,000 in September, a four-year high, Commerce Department figures showed on October 17. Prices for existing homes climbed in August by the most in two years as low interest rates, a diminishing supply of discounted foreclosed properties and a growing US economy spurred demand. The S&P/Case-Shiller index of property values in 20 cities rose 2 percent in August from a year earlier, the biggest annual gain since July 2010, the group said. The median forecast of 25 economists in a Bloomberg survey projected a 1.9 percent gain.

        In the New York metropolitan area, prices fell 2.3 percent in the 12 months through August. Only Atlanta had a bigger drop among the 20 cities in the index. The storm is more likely to raise labour costs than prices for materials, said Martin Connor, chief financial officer at Toll Brothers, the largest US luxury-home builder.

        TypeInfo: news

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