{"id":819882,"date":"2026-07-23T02:09:32","date_gmt":"2026-07-23T02:09:32","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/819882\/"},"modified":"2026-07-23T02:09:32","modified_gmt":"2026-07-23T02:09:32","slug":"a-broker-accountant-and-economist-walk-into-a-housing-crash-and-walk-out-wiser","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/819882\/","title":{"rendered":"A Broker, Accountant and Economist Walk Into a Housing Crash \u2014 and Walk Out Wiser"},"content":{"rendered":"

The 2008 housing crash was the result of a perfect storm, fueled by reckless lending and blind market confidence. Today, we have stricter underwriting and tempered attitudes, yet 60% of Americans believe we\u2019ll enter a recession in the next year, according to NerdWallet\u2019s Consumer Financial Resilience Index<\/a>. <\/p>\n

That fear isn\u2019t entirely unfounded. On average, economic crashes happen every 10 to 15 years, says Cosmo P. DeStefano, a retired CPA and former tax partner at PwC. \u201cYou’re going to see it over your lifetime a few times.\u201d<\/p>\n

So, if uncertainty is the only certainty, how can you really prepare? I spoke with three financial experts who experienced the 2008 crisis firsthand and learned lessons that still apply today. <\/p>\n

Patience can be more valuable than equity<\/p>\n

In 2006, Kevin Watson, branch manager and home loan specialist for Churchill Mortgage, had just built a new house outside of Nashville, Tennessee. <\/p>\n

\u201cWe had a sizable down payment, but not huge,\u201d Watson says. He planned to be in the house a couple of years and opted for an interest-only adjustable rate mortgage<\/a> (ARM), which keeps early payments low since you\u2019re only paying the interest (an increasingly popular option leading up to the 2008 crash). <\/p>\n

The trade-off is that you\u2019re not building equity … a reasonable risk if everything in your life and the market remains stable. <\/p>\n

But when the housing crisis hit, foreclosures spiked, inventory surged and home values dropped. Suddenly, equity was the lifeboat that many, including Watson, didn\u2019t have. <\/p>\n

\u201cWe ended up pretty much what they call underwater, meaning your mortgage was bigger than your value,\u201d Watson says. And he wasn\u2019t alone: 11.59% of housing units were underwater in 2009 \u2014 more than double the figure from 2007 (4.83%), according to the U.S. Census Bureau. <\/p>\n

Unable to sell the house, Watson rented it out to help cover the costs. He eventually moved back in, mortgage-free, which led to one of his biggest lessons. <\/p>\n

\u201cIt’s not about timing the market, more about the time in the market,\u201d Watson says. Risk can be easier to balance if you have more than one exit strategy, as well as the flexibility and patience to ride out the dips. <\/p>\n

Today, we’re short on inventory, Watson noted. If rates drop, more buyers qualify, demand increases and prices go up. This might push buyers to stretch their finances to get into a home \u2014 again, a reasonable risk if everything in your life and the market remains stable. <\/p>\n

Sound familiar? It\u2019s not the same storm as 2008, but there are similar weather patterns. Knowing how much of a risk you can take comes down to your own tolerances and budget. <\/p>\n

Calculating your debt-to-income ratio<\/a> (DTI) is a great jumping-off point to understand how much risk you’re taking on. Lenders typically prefer a DTI of 36% or less, but this figure is as much a guide for you as it is for them. <\/p>\n

Letting go is a financial superpower<\/p>\n

NerdWallet Senior Economist Elizabeth Renter bought her first home in 2006. <\/p>\n

\u201cAs a first-time buyer, I qualified for down payment assistance and put nothing down,\u201d Renter says. \u201cThe mortgage was more than manageable between two incomes.\u201d <\/p>\n

But when the crisis hit, it wasn\u2019t falling home values that delivered the biggest blow \u2014 it was going from a two-income household to one in 2007.<\/p>\n

\u201cI struggled to make the payments,\u201d Renter says. \u201cMy house became unaffordable because the household income changed, not necessarily because the market changed.\u201d <\/p>\n

Renter battled with the decision to \u201cdo something\u201d for a few years before reaching out to someone about short sales. A short sale<\/a> \u2014 selling a home for less than what’s owed on the mortgage \u2014 is typically preferred over foreclosure since it’s less costly for lenders and less damaging to the borrower’s credit.<\/p>\n

Many homeowners in the years after the housing crisis took this route, leading to a surge in short sales. In 2012, 7.7% of sales were short sales compared to 0.6% in 2006, according to transaction data from Cotality. <\/p>\n

\u201cThe thing preventing me from moving forward sooner was pride \u2014 I was embarrassed that I had to let my home go,\u201d Renter says. But sometimes you have to separate those feelings from the facts and make pragmatic decisions. \u201cIf it no longer makes sense for you to live there, it\u2019s OK to let it go and move on.\u201d<\/p>\n

\u201cThe first person I approached with my problems was my former real estate agent. I knew she was a pro, and I didn\u2019t feel the shame I might have felt bringing my family and friends into the fold,\u201d Renter says. The agent referred Renter to a short sale expert and the house was sold in 2012. <\/p>\n

\u201cI realized I hadn\u2019t done anything wrong, but my conditions and those in the economy around me had changed,\u201d Renter says. Her experiences transformed her perspective on what a “home” means \u2014 she\u2019s since bought again and also rented. <\/p>\n

\u201cLiving somewhere new feels like an adventure rather than a measure of success,” she says, “and this perspective helps me focus more on what matters.\u201d <\/p>\n

Follow your gut, not your neighbor<\/p>\n

DeStefano, the retired CPA, bought his home in 1998 with his young family. <\/p>\n

\u201cIt was our first mortgage and we had just had our son,\u201d DeStefano says. \u201cWe stretched to what we thought we could do and we charged in.\u201d<\/p>\n

In the late 90s, the 2008 housing crisis was just a twinkle in the economy\u2019s eye and market optimism was high. But despite the bull mindset, DeStefano decided to pay aggressively into his mortgage instead of investing \u2014 a move that shocked his peers. <\/p>\n

\u201cAs a raise came or if a bonus came, I would actually add more money to my monthly payment,\u201d DeStefano says. \u201cPre-paying was just a piece of the bigger picture\u2026 I knew where I wanted to go, and I knew market crashes were going to happen.\u201d When the crisis hit, DeStefano kept to his plan and took advantage of the falling interest rates. <\/p>\n

\u201cI just started refinancing,\u201d DeStefano says, noting that he still kept paying more than what was due despite securing lower mortgage rates. <\/p>\n

In today\u2019s market, refinancing typically makes sense when the rate is at least 0.5 to 0.75 percentage points lower than your current one. Another key metric to know is your loan-to-value ratio (LTV)<\/a> \u2014 the amount you\u2019re borrowing compared to your home\u2019s value. The lower your LTV, the less risky you look to lenders and the more likely you\u2019ll be able to secure lower rates. <\/p>\n

DeStefano eventually paid off that mortgage and is still in the house today, attributing his success to the clear, personalized plan he\u2019d had from the start \u2014 \u201cpersonalized\u201d being the operative word.<\/p>\n

\u201cYou need to find what works for you, not what works for the guy next door or the girl sitting across the office from you,\u201d DeStefano says. <\/p>\n

We all have different ambitions and comfort levels when it comes to finances. Sometimes that means going against popular trends, being patient in the face of uncertainty or not letting shame dictate your decisions. Whatever the journey, get up close and personal with your money. Even if you can’t control the weather, financial awareness can be your lighthouse in the storm.<\/p>\n

\"\"<\/p>\n

Addas a preferred source on Google<\/p>\n

<\/a>About the author\"Georgia<\/a><\/p>\n

Georgia Rose is a lead writer on the mortgages team at NerdWallet. Her work has been featured in The Washington Post, The New York Times, The Independent and The Associated Press. Throughout her career, Georgia has written on a variety of subjects, including personal finance, government policy, science and technology. She enjoys researching complex topics and distilling the information for her readers. Before joining the mortgages team, she wrote for the international and life insurance verticals.<\/p>\n","protected":false},"excerpt":{"rendered":"The 2008 housing crash was the result of a perfect storm, fueled by reckless lending and blind market…\n","protected":false},"author":2,"featured_media":819883,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132],"class_list":["post-819882","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-ca","tag-canada","tag-finance","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/819882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=819882"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/819882\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/819883"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=819882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=819882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=819882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}