Jersey Shore Vacation Homes: From Escapes to Financial Traps

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Superstorm Sandy Recovery (A crane, center, is seen at a distance as two damaged homes rest off their foundation as the cleanup
The Associated Press

By Katie Zezima

STAFFORD TOWNSHIP, N.J. -- The Jersey shore's vacation bungalows and cottages have for decades staked out little plots of paradise where families who scrimped and saved could while away summer evenings, parents having drinks on the deck and kids working at an ice cream stand or stealing a first kiss under a boardwalk. Now, a year after Hurricane Sandy blasted through, countless middle-class families whose tiny vacation homes were once the place to make precious memories are finding them to be a financial albatross.

While billions of dollars in federal relief have helped primary homeowners rebuild after the storm, second homeowners find themselves stuck in limbo: not eligible for enough money to rebuild or even demolish their homes while they remain on the hook for mortgage payments and fatter flood insurance fees for houses they can't even use. (Pictured above are Sandy-damaged homes in Seaside Heights, N.J.)

"We thought we were good for the community, and to suddenly be labeled this second homeowner like it was a derogatory statement, it was like a smack in the face," said Benita Kiernan, a retired nurse who with her retired New York City firefighter husband sank every spare cent into a cottage on an inlet in Stafford Township. "We became the scarlet-S second homeowners."

For decades, the Jersey shore has been a place where police officers, plumbers, teachers and other working-class families can save up and put a down payment on a small beach bungalow to spend their summers "down the shore," as it is called. In many cases the properties are passed down through families. Even before Sandy tore the Kiernans' home down to a wooden shell, it was not the palatial estate conjured by the phrase "vacation home." But even then the modest 1,000-square-foot house had been a financial stretch -- the family skipped dinners out and vacations to be able to afford it.

The sacrifice has been worth it, Kiernan said. The shore is where their grandchildren played, their four daughters packed in with their friends and the couple was considering moving full time because they viewed the community as a second hometown. "It was low-key fun," Kiernan said.

But the little house offers mostly heartache now. The Kiernans received about $100,000 from their insurance company, but that's less than half the amount of their policy and nowhere near enough to pay the mortgage and shoulder the cost of demolishing and rebuilding. "This was our investment," John Kiernan said as his wife wiped away tears.

Even tearing down the house and selling the lot is no easy way out -- while homes have been selling on the Jersey shore, values are not what they were before the storm. "Do I build it, do I leave it? I can't even sell the property because properties have been downgraded that much," he said.

Second homeowners are not eligible for a suite of relief options available to primary homeowners. Federal Emergency Management Agency rebuilding assistance, $1.8 billion in rebuilding funds the U.S. Department of Housing and Urban Development gave to New Jersey or low-interest loans from the Small Business Administration. Second homeowners will also see their flood insurance rates go up because they are not grandfathered in like primary homeowners.

In Lavallette, the skeleton of Cora Hoch's sea glass-colored vacation bungalow remains, its foundation tipped, wiring exposed, doors missing and "do not enter" spray-painted on the side. "We put our life savings into that little house," said Hoch, a school nurse from Kearny, N.J. "We can't afford to fix it, and FEMA will not give us anything."

FEMA said the assistance money is meant to be a one-time stopgap measure to help people get back into their primary homes as soon as possible. Congress, FEMA said, set the rules. "It was designed for those who don't have a roof over their head or a place to live," said Tom McDermott, a FEMA mitigation specialist. "I guess they said if they can afford a second home or a camp, and don't take this the wrong way, it isn't necessary that they get back up so they can enjoy a weekend or a week away."

Second homeowners said the problem is that insurance doesn't fully cover the price of the options for these homes: rehabbing and, in many cases, lifting them or demolishing them and rebuilding from scratch. "Everybody is in limbo because you can't proceed to the next step," said Benita Kiernan, whose neighborhood is now a patchwork of vacant damaged homes, freshly leveled lots and small ranch homes boosted up on stilts in an effort to keep them out of the water the next time a massive storm strikes.

Many are waiting to see if they can qualify for any other assistance, but aside from private charities, there is little help. Some are dipping into their retirement funds.

Michelle and John Novella are rebuilding their Stafford Township home on their own, putting everything on credit cards. "First homeowners should be the priority," Michelle Novella said, but she feels second homeowners who patronize the seasonal businesses and make up the lifeblood of the Jersey shore should get something. "Otherwise," she said, "it's going to make the Jersey shore very different."

More recent news about Hurricane Sandy:
Storm of Protest Over Rising Flood Insurance Rates
SEE: On the Jersey Shore, Recovery From Sandy Comes Fast -- and Slow
Properties at Risk of Insurance Rate Hikes
See Gallery
Jersey Shore Vacation Homes: From Escapes to Financial Traps

Vacation homes began losing their subsidies in January 2013, with premiums set to rise by 25 percent yearly until they reach their actual market rates.

Pictured: A vacation home on Cedar Bonnet Island, N.J., that was damaged by the storm surge from Hurricane Sandy.

Flood insurance subsidies would end for newly purchased properties, or properties where the flood insurance had been allowed to lapse.

Along with primary residences, businesses began losing their subsidies on Oct. 1, 2013.

Pictured: Businesses left empty or boarded up three months after Hurricane Sandy hit in the Rockaways section of New York.

Homes that suffer flood damage exceeding their "fair market value."

Pictured: A hurricane-damaged home in Scituate, Mass.

Homes that repeatedly suffer severe losses ("four or more claims payments of over $5,000 or two claims that exceed the value of the property").

Pictured: Hurricane Rita floodwaters pass under a damaged house built on stilts in Orange, Texas, in 2005 -- four weeks after Hurricane Katrina hit the Gulf Coast.

Properties in which the cost of repairing damages or of recent improvements exceeds "30 percent of the fair market value of the property."

Pictured: This house in New Orleans' Lower Ninth Ward, which was hard-hit by Hurricane Katrina, was rebuilt and elevated according to new flood rules.


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