7 lessons from the U.S. housing crisis

Originally published: January 4, 2012 4:26 PM
Updated: January 5, 2012 2:58 PM
By GIGI BERMAN AHARONI  Special to Newsday

Photo credit: iStock | A look at some changes and trends that could revive the U.S. housing market and everyone's financial future.

With 2012 ahead and four years since the housing collapse helped push the nation into a severe recession, it might be time to sort out the  lessons from the crisis. Here are changes and trends that will -- real estate experts hope -- revive the housing market and everyone's financial future.

1. Buying what we can afford
In the go-go years from 2003 to 2008, home buyers typically purchased homes at 20 percent to 30 percent beyond their budget because money was so easy to secure from banks. They also counted on promotions and bonuses, and the belief that their home's value would continuously rise. Now, we know better. It's become more common for buyers to tell their agents how little (rather than how much) they want to spend, even if they can qualify for a bigger mortgage. "They don't want a McMansion anymore -- they want what they can afford," says Pearl Kamer, chief economist for the Long Island Association business group. Because qualifying for a mortgage is so much harder today, "in the short run, this is depressing home sales, but in the long run it will create a more stable housing market," Kamer says.

Real estate professionals are, perhaps, more sharply aware than anyone of the impact of the housing crisis and recession. "In 25 years, I've seen the whole gamut: People have gone from being flamboyant about money to being cautious," says Nikki Sturges of Daniel Gale Sotheby's International Realty in Huntington. She notes that not only are people buying smaller homes, but they also want to be clear about heating and electric costs and to be sure they'll have reserves for emergency repairs for refrigerators, ovens and washing machines.

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