The waterfront home for sale in Old Saybrook, Conn., was built after Hurricane Sandy with rock and concrete breakwaters and seawalls. Foam insulationlines were added to the home's walls to block wind and water from breaching the fascade. (By Peter Harron)

The waterfront home for sale in the shoreline town of Old Saybrook, Conn., overlooks Long Island Sound with three bedrooms, three baths in 3,800 square feet. Set on just over an acre of land, the three-story property has about 100 feet of water frontage with a wraparound terrace and outdoor lounge facing the water. The home even has a Hollywood pedigree: It sits on land owned for many years by the actress Katharine Hepburn.

Yet what may make the property’s $6.88 million price tag palatable to potential buyers are the less-visible features deployed after Hurricane Sandy, which swept across Connecticut and parts of the Northeast coast in 2012.

Rock and concrete breakwaters and seawalls were installed in the water outside the property to soften the impact of a storm surge, while landscaped berms protect against rising tides. Foam insulation lines the home’s walls to block wind and water from breaching its facade. High impact fiberglass windows were installed to withstand high winds, rain and moisture.

“Sandy was a reminder of just how vulnerable these waterfront areas can be,” says Frank Sciame, the property owner and Manhattan builder who spent more than $1 million building the home. “We knew that we needed to make this home much more resilient to severe weather.”

Hurricane Sandy stretched from the central Appalachians well into New England when it came ashore nearly four years ago, tearing through thousands of homes and leaving more than $70 billion in damage in its wake. The storm, which left miles of shoreline buried in sand and killed 182 people, still ranks as the second-costliest in American history after Katrina.

Since then, coastal real estate markets pounded by the storm have mostly recovered, thanks in part to federal, state and local governments pouring billions of dollars into repairing and replacing much of its damaged coastline.

A woman walks in the Breeezy Point community, which was damaged by hurricane Sandy in October 2012. (SHANNON STAPLETON/Reuters)

The U.S. Army Corps of Engineers moved millions of cubic yards of sand onto shoreline areas from New Jersey to Maine in an effort to fortify beachfront battered by the storm. The restoration and resiliency projects are part of the $51 billion relief package passed by Congress in the wake of the disaster.

Local home builders and developers are also again erecting new properties in many locations, including some beachfront communities that rank among the most expensive for real estate in the country. From seaside towns along the Connecticut coast and the Hamptons on New York’s Long Island, to locations on the Jersey Shore and Far Rockaway in Queens, property values in many places are again rising and buyers returning, real estate data show.

In the wake of the storm, flood insurance premiums rose sharply, and many municipalities established tighter guidelines on how and where to build along the coast. The new building restrictions reflected rising sea levels and flood risk and followed federal emergency management standards in rebuilding homes to withstand future storms.

The tighter restrictions initially hampered the waterfront property market in more affluent areas, but nearly four years after Sandy some of the priciest coastline locations are now rebuilt and seeing sharp increases in property sales.

“It’s been a very long recovery, but we’re finally seeing home values and sales get back to pre-Sandy levels,” says Virginia Klein, real estate broker with Re/Max Heritage in Westport, Conn. Storm surges caused by Sandy reached as high as 12 feet in Westport, sending walls of water down many of its streets. Sandy tore through more than 3,000 homes in Connecticut, causing damage costing an estimated $360 million. “Many of us really underestimated just how long it would take to get these areas back to normal,” Klein says.

Despite the recovery in many places, Sandy is still forcing some residents along the Northeast coast to accept some harsh new realities.

On New York’s Fire Island, federal officials are tearing down dozens of homes in several communities to restore protective dunes that were flattened by Sandy. Though the Army Corps of Engineers is building a new 12.5-mile long dune, at a cost of just over $200 million, razing the homes has angered many longtime residents, including vacation home owners, an affluent group that makes a significant sector of the 32-mile barrier island’s real estate market.

“The storm’s impact showed just how much work needs to be done to protect this island,” says C.J. Mingolelli, a broker for Douglas Elliman who has been selling real estate on Fire Island for more than a decade. He estimates that home values dropped between 20 and 25 percent in the year after Sandy as the pool of buyers dwindled and many residents took damaged properties off the market, fearing lower sale prices. Prices on the island have since recovered, though a low inventory of homes for sale still persists, Mingolelli says.

Along the New Jersey coast, counties hit hardest by Sandy are still grappling with closed streets, broken streetlights and unfinished boardwalks. The storm also wiped out thousands of homes, many of which haven’t been rebuilt.

A bulldozer moves sand into position as it pumps onto the beach as a mixture of sand and water in Monmouth County, New Jersey, as part of beach construction where Hurricane Sandy impact was severe. (U.S. Army Corps of Engineers)

The empty lots in working class shoreline communities such as Ocean and Monmouth counties are not only causing blight: With thousands of homes no longer there, the towns and school districts that count on the property taxes collected from these homes to fund their budget are still wrestling with shortfalls.

Sandy mostly spared Maryland and other Mid-Atlantic states but the storm still racked up millions of dollars in damage. Ocean City and Salisbury, the largest city in Maryland’s Eastern Shore region, sustained the most damage, including the destruction of at least 100 feet of a fishing pier at the beach of Ocean City.

“Sandy was just barely a Category 1 hurricane when it made landfall,” says Joseph Theobald, director of Ocean City Emergency Service. “But it still managed to be one of the most destructive because so many people were in its path.”

Despite the costly programs to rebuild coastal areas, some disaster experts say the region still lacks many key protection measures nearly four years after Sandy with many projects remaining incomplete because of funding and planning delays.

In Ocean County, N.J., a $512 million project to extend the beach into the water and protect coastal development won’t be completed until 2065. A $1.2 billion plan to build a 10-mile wall around Manhattan to protect waters from flooding the city won’t break ground until 2017, according to the architecture firm hired to design the project.

Meanwhile, a chorus of experts is calling on political leaders and urban planners to stop building homes in vulnerable coastal areas.

Robert Young, a North Carolina geologist who has studied the way communities respond to storms, says spending tens of billions of tax dollars subsidizing coastal reconstruction in the aftermath of storms is creating “a bit of a moral hazard.”

“There’s usually very little thought given to whether it actually makes sense to keep rebuilding in these areas,” says Young, who is director of the Program for the Study of Developed Shorelines at Western Carolina University. “Waterfront communities can’t keep thinking about short term vulnerabilities but instead need to make concrete plans for withdrawal over the long term.”