How Hurricane Sandy transformed the Jersey Shore into 'a playground for the rich'

• Jersey Shore residents battled through a patchwork of programs to rebuild after Hurricane Sandy.
• Meanwhile, wealthy newcomers and booming luxury construction have driven up home prices.

On October 29, 2012, Hurricane Sandy brought 5 feet of water into a low-lying home in Highlands, New Jersey, the shore town at the northernmost edge of the Garden State's 130 miles of coastline.

Barbara D.'s lifetime in things was ruined: the antique mahogany bedroom set she inherited from her aunt, her collection of books, family photo albums reduced to another pile of trash choking the streets of the shore town.

"Everything smelled like fish. It stunk," said Barbara, a retired nurse who asked not to use her full name for safety reasons. "You could smell that the ocean had come in and gone out and things were just dead."

Even 10 years after Hurricane Sandy, Barbara is still reminded daily of the mental and financial toll it took on her. She still has at hand some of the many records, copies of receipts, forms, and applications that she had to present to government agencies tapped to aid residents on their serpentine road to recovery.

When Sandy hit, Barbara owned two rental properties and a primary residence on neighboring lots that she purchased for a combined $495,000 between 2003 and 2008. In trying to claw her way back to normal, she drained over $100,000 from her retirement account and racked up $60,000 in credit-card debt. And Barbara is one of the luckier ones.

Sandy swept through 1,400 of the roughly 2,700 homes in Highlands, a town of 4,600 residents that's a 75-minute drive south of New York City. In New Jersey as a whole, the hurricane devastated some 55,000 homes, took 38 lives, and caused $37 billion worth of damage.

But the monumental damage of Sandy and past storms hasn't stopped the steady swelling of property values in Highlands and other coastal New Jersey towns. Residents up and down the Jersey Shore have witnessed the shift.

"In 2008, houses were going for $150,000, $160,000, $200,000, the most," Barbara said. "Now they're up to $500,000, $800,000. There's a couple $1 million houses."

For shore dwellers whose homes were destroyed by Hurricane Sandy, the return to normal was convoluted and costly. Many folks with shallower coffers left because they couldn't afford the rebuild or didn't have the fortitude to see through a rebuild dependent on various government grants. Others are still feeling the financial impact of rebuilding 10 years later. It's a stark contrast to wealthier homeowners and builders who, despite the financial hardships from the storm, were able to build back bigger and better.

The bureaucratic red tape around flood insurance and rebuild programs linked to Hurricane Sandy deepened the divide between the haves and have-nots of the Jersey Shore. It often forced those with less funds to drain their savings to recoup their homes, while allowing those with means to build and maintain more expensive properties along the coast.

Nowadays, with the soaring costs of maintaining a beach home and the dizzying rise in the cost of coastal real estate, homeownership on the shore is largely a luxury for the wealthy.

Affordability vanishes on the Jersey Shore

Highlands is one of the last towns on the shore that has been able to preserve some sense of affordability, but pricey new real-estate developments in the area, as well as renewed interest in the sleepy seashore town from New Yorkers looking for more elbow room, are beginning to change that.

Highlands' median annual income rose about 21%, from $62,770 to $76,263, between 2015 and 2020, according to census data adjusted for 2020 inflation. Its average home sale price increased about 73% from $245,853 in 2015 to $424,977 in 2021, according to the New Jersey Division of Taxation. (Before the pandemic led to skyrocketing housing prices, in 2019, the average home sales price in Highlands was $300,270.)

Compared with some of its more posh neighbors — like Rumson, about 5 miles to the south, and barrier island towns like Sea Bright, due east of Rumson — Highlands has always been more working class.

"Highlands people were the ones that worked for Rumson and Sea Bright and everybody else," Barbara said.

It isn't just the real estate itself but also the costs associated with homeownership — flood and homeowners insurance, maintenance, and post-storm repairs — that are becoming heftier and less realistic for working-class people to afford.

Barbara and her husband owned a 600-square-foot house, an old clamdigger's shack, that they purchased for $95,000 in 2003. In the decade before Sandy, they had funneled money into the place, making it cute while they lived there. By the time Sandy hit, they had moved next door. Both their new home and the shack took on 5 feet of water. The shack was insured for $197,000, including contents, of which the insurance company paid out only about $94,000.

"Anytime anybody tells you to get insurance, I'm like, 'Don't buy insurance.' It's a rip-off," Barbara said. "We thought, 'Our house is insured for this amount. We get that amount, and we can rebuild.' They didn't even give us the option of getting that much."

Barbara estimated she spent about $160,000 out of pocket, including drawing from her retirement fund and amassing credit-card debt to live, pay her mortgages, fix up the properties, and lift them after all the grants and insurance payouts.

The clamdigger's shack, and the way coastal real estate has grown in value since Sandy, ended up being her lifeline. It was Barbara's ability to sell it for $277,000 in 2021 that lifted her out of the debt she accrued after a lifetime of saving.

The storm took a financial toll on Barbara that she's still grappling with.

"I'm without debt and that's about it," she said. "I don't really have anything in the bank anymore. I just have my retirement and Social Security. It's not a lot."

While Barbara and her husband chose to rebuild after Sandy, her neighbor chose to walk away. Barbara said the neighbor's house was foreclosed on, and in a plotline that's become familiar to shore dwellers, a contractor purchased the lot to erect a much-larger, more-expensive house than what was torn down.

"She got her life back a lot quicker than I did," Barbara said of her neighbor.

A broken support system leaves less-well-of people behind

The state has allocated $3.6 billion of the $4.2 billion in federal funds it received for recovery after the storm, The Philadelphia Inquirer reported in October.

Amanda Devecka-Rinear founded the New Jersey Organizing Project after she witnessed the disconnect between the people affected by Hurricane Sandy and the organizations and programs that were supposed to help them recover, like the Federal Emergency Management Agency and its Reconstruction, Rehabilitation, Elevation and Mitigation Program.

Devecka-Rinear said driving around the working-class communities of Long Beach Island, New Jersey, even two years after the storm, she'd pass "damaged house after damaged house after damaged house" that were sitting empty.

She added: "It was clear that there was something profoundly wrong with the system that New Jersey's working families had to depend on to make it back after a devastating storm."

Of the roughly 8.9 million people who live in New Jersey, 7.15 million live in the state's coastal portions, which include not only the Jersey Shore but inland areas near other waterways, according to the National Oceanic and Atmospheric Administration. Milliman, an actuarial company that works with FEMA's National Flood Insurance Program, found that about 47% of coastal dwellers had flood insurance, The Inquirer reported.

In New Jersey, homeowners without mortgages aren't required to have flood insurance. This can include people who own homes that have been in the family for a long time and are long-since paid off, as well as older people who have paid off their mortgages.

There were only a few grant programs you could apply for if you didn't have a mortgage, Devecka-Rinear said.

"But none of them would have been enough to really rebuild a home that had been destroyed, to elevate it, and mitigate, which was some of the requirements for the program," she added.

"So people just got pushed out or had to walk away or had to sell their places because they could never cobble together the funding to get back if they didn't have flood insurance," Devecka-Rinear said. "And flood insurance is expensive."

It's an average of $1,000 a year, according to an analysis of National Flood Insurance Program rates by Forbes, and even more expensive for homes in the flood zones that have yet to be elevated. At the time of Hurricane Sandy, before her houses were elevated, Barbara was paying about $5,750 a year in flood insurance for her two rental properties and primary residence.

A wave of wealth pours down the Shore

While Barbara and other longtime residents have struggled to recover, affluent newcomers have descended on the Jersey Shore over the past decade, increasingly turning coastal communities into enclaves for the wealthy.

Last week, the local outlet NJ Spotlight News published a report on the different marks Sandy left on the state's coastline, one of the most visible being an explosion of luxury developments in Monmouth County, where Highlands is.

"I think we're seeing that idea of 'becoming a playground of the rich' playing out in what can appear to be slow motion," Peter Kasabach, the executive director of New Jersey Future, told NJ Spotlight.

"After Sandy, most of the damaged homes were Cape Cods and duplexes that were built in the '50s, '60s, and early '70s," Mayor Joe Mancini of Long Branch told NJ Spotlight News. "And the duplexes that were ripped down were replaced by single-family homes."

Shawn Mery, the 60-year-old owner of Heritage Builders in Oceanport, New Jersey, a 20-minute drive from Highlands, said wealthy buyers from New York City had poured into the region since 2012.

"After Sandy, there was a lot more money coming in," Mery, who has built Jersey Shore homes for 15 years, told Insider.

Cheap, damaged properties became prime investment opportunities.

"People were not moving back into their homes and moving elsewhere," he said. "So builders would buy up lots or knock standing homes down and rebuild new construction."

Mery has observed these new homes grow increasingly elaborate over the years, with more square footage and luxury finishes.

Homes for sale in Long Branch, a town 8 miles south of Highlands where cheap taverns have been replaced by restaurants plating $112 lamb chops, are indicative of the gold rush.

Take, for instance, a four-bedroom $1.7 million single-family home, which has hardwood floors and a gourmet kitchen, being built on a property that sold for just $390,000 in 2020. A five-bedroom $1.8 million home with quartz countertops has been erected on a lot sold for $375,000 just a year ago.

Both homes are elevated, sitting on top of first-floor garages to prevent flooding, a calling card of post-Sandy construction.

The heightened activity has overflown into towns that might've once been less ritzy, just like Highlands. Mery said in Asbury Park, which Bruce Springsteen once called a "hanging on a thread, blue-collar beach town," a single-family fixer-upper could cost nearly $500,000, when it was half that years ago.

"Along the coastline has become so expensive that it prohibits a lot of people from moving there," Mery told Insider.

The climate crisis is getting worse, and so will flooding-and-rebuilding patterns that favor the wealthy

Hurricane Sandy was the beginning of the end for working-class shore towns, cementing beachside homeownership as a luxury most easily accessed by the wealthy.

As extreme weather events become more common and sea-level rise from climate change encroaches, more people will be affected by flooding, and the cost of maintaining a home on the shore will likely jump higher.

A Rutgers University study found that sea-level rise had increased the frequency of minor tidal flooding in shore communities about twentyfold in the past 70 years and exposed about 40,000 New Jersey residents to Hurricane Sandy floodwaters who would not have otherwise been affected.

Adding to homeowners' burden, the National Flood Insurance Program recently pivoted to a new rating system for pricing its coverage, called Risk Rating 2.0, that's expected to drive premium increases further. It's expected to affect about 80%, or about 3.6 million, of the program's policyholders nationwide, according to David Maurstad, FEMA's deputy associate administrator for its Federal Insurance and Mitigation Administration.

Barbara and Devecka-Rinear are only two people touched by what some say are the shortcomings of public policy and programs surrounding disaster mitigation and recovery. Both say something has to change.

Devecka-Rinear and the New Jersey Organizing Project recently released a set of recommendations to overhaul the American disaster-recovery system to work better for those who need the financial assistance most. One action item is revamping the National Flood Insurance Program to include funneling money toward mitigation measures, rather than just relief.

But without ratification of the recommendations, or other overhaul measures, the costs associated with extreme weather events on the shore will likely continue to push all but the wealthiest inland.

"We need to treat flood insurance like we treat Social Security and Medicare," Devecka-Rinear said. "Those are public programs that make the inevitable aging more graceful for all of us.

"Flood insurance should expand to include other kinds of climate-related disasters, and everybody should be in it to make the inevitable, at this point — a drought, a wildfire, a superstorm — more manageable because I think all of us are going to face something like that."

And, of course, it isn't only New Jersey where this sequence of events — disaster, rebuild, pricing out — has come to pass.

It happened in Galveston, Texas, where Hurricane Ike destroyed thousands of homes that were replaced by pricey short-term rentals that some locals say drains the town of its community character. It happened in New Orleans, where the damage from Hurricane Katrina paved the way for pockets of gentrification. It could happen in the areas surrounding Fort Myers, Florida, where people are still picking up the pieces from Hurricane Ian, which swept across the state in late September.

So long as imperfect government programs that favor the rich are tasked with overseeing recovery efforts after a natural disaster, the cycle is as sure as the next storm.