Before the housing bubble burst, selling and buying homes seemed nearly effortless. People weren't afraid to go out and find a new home before theirs sold. And if theirs didn't, there was always a bridge loan. But people are more cautious than ever when it comes to making an offer on a new home
The road to home ownership has been a crooked one for Joanne and Levi Tvedt. The new parents of twins are about to move into their second home, but it's taken them two years to get there.
"We just didn't want that burden of two mortgages and being that further in debt. We just wanted to play it safe," Joanne said.
And the Tvedts are very happy they did. They decided to move to Sioux Falls from Rochester, Minnesota, two years ago to be closer to relatives. They put their home on the market in the worst real estate climate possible.
"It's stressful. You write a mortgage check every month for a home you never get to be in and you pay rent. It's stressful," Joanne said.
"It was an uncomfortable feeling for a little while, making that payment for who knows how long; there's no end in sight really. We were worried, but we figured Rochester had a good enough market that eventually it would sell," Levi said.
It took a little more than a year, but the Tvedts did finally sell their home at a loss.
After two years of renting, the Twedts finally recovered enough economically from the loss they took on their house in Rochester to begin looking in Sioux Falls.
"I always tell my buyers get rid of house A before you buy house B if that's going to make the process more fun and more comfortable for you," realtor Gretchen Shafer said.
Shafer says when she started in the industry five years ago, it was common-place for buyers to rely on bridge loans if they ended up owning two homes at once: one they were trying to sell and the one they were buying.
"You'd run into more people willing to do a bridge loan or confident that 'if I sell my house in a month, I'll be fine'. Now you see a little more hesitant because, is it going to sit for a month or two years? How long am I going to be sitting with house A until I get to B," Shafer said.
While bridge loans are still available, with stricter lending standards, they can be more difficult to get.
"Before, we were willing to take more of a chance on the house. But most banks have cut back their maximum loan to values," Cortrust Mortgage Banker Dave Kelly said.
Even if the Tvedts could have qualified for a bridge loan, they're glad they didn't consider it.
"I think you're going to see less people willing to take a risk because you don't know what's going to happen a year or two years down the road. And a house is a commitment, a long-term commitment," Levi said.
"Trying not to get in over your head is a smart choice," Joanne said.
The Tvedts are now closing on their "second" home in a few days and they can't wait for their growing family to move in.
"Very anxious; we're ready to expand our living area and get in a neighborhood again," Levi said.
"We're excited to have the room and a yard and just the things a home brings to a family," Joanne said.
Realtors say the Sioux Falls housing market is good, much better than the rest of the nation, but it will take awhile before buyers and sellers get their confidence back everywhere.