Hello, Goodbye

We finally closed on the sale of our old home, and concurrently closed on the purchase of our new one. It took 8 weeks and 11 weeks, respectively, after approval. This was one of those Scenes from the Recession moments. Well, not moments- more like months. And we were the lucky ones.

Our old home was beautiful, less than 5 years old, and sitting on a half-acre, less than 15 minutes from downtown Austin, one of the hottest metros in the country. We listed it on the MLS through one of those DIY, flat-fee listing services, and it took four months to get an offer, more than double the "average" time on market (at least in days past; the average is skewing longer now). Our home was custom-built, weird configuration, so there were not any real comps, which contributed to the longer time on market. But, after the offer, it still took TWO MONTHS to close, and that despite the fact that our buyers had 10% down, strong credit, and affluent co-signers (their parents, who run successful businesses).

The closing kept getting pushed back due to piddly demands from lenders to produce this documentation or that documentation, then rejecting the loan at the last minute, forcing the lenders to shop at multiple lenders for the loan, after having been pre-approved.

"This is normal," their agent explained to us, wearily. "The housing market is fine here in Austin," he said. "But nobody can get loans." So supply is high, and demand is high, but the loans are scarce. Houses are sitting longer on the market, simply because lenders are too nervous to turn loose of the money to anyone but the highest-quality buyers, on the best-quality homes.

After breathing a sigh of relief when our deal finally closed, we then faced the exact same problem for the house we were buying: we had been pre-approved long ago, had 20% cash down payment, no debt (literally), good savings, and plenty of income. What's more, our house was a steal, a foreclosure flip that we had been pursuing for months. Because ours had liens against it, we had to wait to close, but even then, the date kept getting pushed back due to underwriting nit-picking.

It's good that lenders are being more careful, and it's good that loan money is flowing, even if it takes a lot longer to turn on the spigot. But had we not been in such a good financial position, carrying two mortgages for a few months could have been financial death. For sellers who are relocating for their job, carrying two mortgages is common.

So what has been the real-world effect of bank bailouts? Maybe I should have applied for my loan at Bank of Curtis.