Floods delay Metro Detroit home sales

Lauren Abdel-Razzaq
The Detroit News
  • Home sales in Metro Detroit for August were down 8 percent compared with August last year.
  • Real estate agents say last month's flooding won't have a long-term impact on home sales.
  • Flooding could cause people to walk away from homes that were already financially underwater.

It's almost like he had a premonition.

When John Rospierski, owner of Edwin Anthony Homes, was building the company's latest house in Royal Oak, he put in a special water-powered sump system, raised the furnace on bricks and other features just in case there was a flood.

It paid off when on Aug. 11, the Metro Detroit area was hit with the worst flooding on record, filling the basements of many Royal Oak homes — and all the neighbors on Gardenia Avenue — with water.

John Rospierski, of Edwin Anthony Homes, shows the water pump and the raised furance in a home on Gardenia Street in Royal Oak.

"There is a very high water table between Royal Oak and Birmingham," Rospierski said. "You have to know where you're building."

The extras he put into the home have paid off. A deal to sell the 2,425-square-foot house closed Thursday.

"It would have been a really hard sell if the basement had flooded," Rospierski said.

Following the flooding that left freeways and basements underwater, home sales took a temporary hit as people tried to clean up and get back on the market, real estate agents say. But real estate agents expect sales to bounce back quickly.

Nancy Robinson of Century 21 Town and Country in Royal Oak said she lost several transactions because of the flooding.

"There were people's homes that flooded who had to use their payment money to restore their home and as a result couldn't buy a home they wanted to," she said.

Overall, because so many homes were affected, few people looking to buy in the hardest hit areas were able to avoid the flooding.

"It put everybody in a standstill for about two or three weeks because that's what it took for people to restore their homes," said Robinson. "As for buyers' fallout, I don't think there's going to be much of that as long as people can document what they did do."

Home sales fell 8 percent in August compared with the same month a year ago, although it is unclear if the flooding had anything to do with it, said Fran Green, marketing manager for Farmington Hills-based Realcomp II Ltd.

In the months leading up to August, sales levels fluctuated.

July saw a 1.3 percent decrease from a year ago, while June sales were up 1.1 percent. Home sales in April and May were down 11.3 percent and 7.2 percent respectively, according to Green.

Ted Easterly, a Realtor with Re/MAX Team 2000 in Dearborn, says the floods may actually help strengthen the market in the long run.

"People are using it as a selling point," he said. "'Even in the worst flood in history, our basement is still dry.'"

He says people with existing problems are getting them fixed to prevent future leaks, making their homes more marketable down the road.

"It was a good test on houses," he said.

While most of Metro Detroit was affected in some way by the flooding, Royal Oak, Ferndale, Hazel Park, Huntington Woods, Warren, Dearborn and Dearborn Heights saw extreme cases where entire blocks of homes had sewer backups.

Disaster declarations are done by county, and the area's three affected counties have been making their case publicly to the state and federal governments. This week, Gov. Rick Snyder asked President Barack Obama to declare a major disaster for Metro Detroit, citing an estimated $1.1 billion in damage.

Royal Oak has an estimated $120 million in personal property damage and losses. In Berkley, 4,400 homes were affected by the floods, city officials say. Dearborn has estimated 40 percent of homes and structures in that city had storm damage.

Warren's estimates 22,000 buildings were damaged.

"We have received over 1,000 insurance claims. We're trying to see if there are things we can do to address this concern," said Jane Bais-DiSessa, city manager of Berkley. "This weather has been very unsual. Our system, when it hits the entire region, it's just not set up to handle this much water."

Daren Blomquist, vice president of California-based RealtyTrac, a national firm that tracks housing data, said the flood damage reminds him of what happened to the East Coast after Hurricane Sandy in October 2012. Although it's too early to tell now, he said it could induce more people to walk away from their homes if they are already financially underwater.

"Several months down the road (after Sandy), we saw a spike in foreclosures," said Blomquist. "If people's property is damaged, they don't have proper insurance, and if they don't have equity in those homes, they are more likely to walk away.

Jim Shaffer, a real estate agent with Keller Williams in Royal Oak, said another factor to look at will be home sales in September. Many closings had to be pushed back while homeowners repaired the damage.

"Closings that pushed back into September will go into the September numbers, so maybe we'll see a stronger month," he said. "I feel like our feet are definitely back underneath us."

Sarah Long, who bought the Royal Oak home from Rospierski, put in an offer just before the rain started Aug. 11.

"The next day, I was so worried, wondering, 'Is there water in my house,'" she said.

The home in Berkley she was renting had a foot of water in the basement, and because she was planning to move, she lost many of her things that were downstairs in moving boxes.

"The water was shooting out of my toilet. It looked like a volcano," said Long. "I lost pretty much half of everything I had."

Although she lost about $21,000 worth of items in the flood, she says she now feels like she her move into this new, flood-free home was predestined.

"It was almost like this is meant to be," she said.


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