Benchmark Happenings
Brought to you by, Jonathan Tipton & Steve Reed of Benchmark Home Loans, Benchmark Happenings is a podcast that is a biweekly discussion about living in and moving to Northeast Tennessee along with the local real estate market. Join your host Christine Reed as she interviews Jonathan & Steve, local business owners, sought-after industry experts, Veterans, Realtors, Benchmark clients, and more.
Benchmark Happenings focuses on discussing all things related to mortgages and Northeast Tennessee. Placing the spotlight on all the reasons you would want to live in and move to Northeast Tennessee, Benchmark Happenings highlights upcoming events, local businesses, things to do, and other aspects related to Northeast Tennessee. We will also be answering mortgage questions from buyers, sellers, and real estate agents as well as discussing everything going on in our local real estate market.
To help you to navigate the home buying and mortgage process, Jonathan & Steve are currently licensed in Tennessee, Florida, Georgia, South Carolina, and Virginia, contact us today at 423-491-5405 or visit www.tiptonreedteam.com.
Benchmark Home Loans | NMLS # 2143
4138 Bristol Highway
Johnson City, TN 37601
Jonathan Tipton
Senior Mortgage Planner
NMLS # 1188088
jonathan.tipton@benchmark.us
Steve Reed
Branch Manager
NMLS # 173024
steve.reed@benchmark.us
Benchmark Happenings
Empowering First-Time Homebuyers: Steve Reed on Navigating the 2025 Housing Market and Avoiding Common Pitfalls
Discover the essential strategies for first-time homebuyers with our guest, Steve Reed, owner-proprietor of Benchmark Home Loans. We promise to equip you with the knowledge to navigate the tricky terrain of the 2025 housing market with confidence. Steve and I discuss the vital importance of selecting the right realtor and lender, steering clear of the common pitfall of relying solely on advertised interest rates or limited research. Rising interest rates have many potential buyers on edge, but with our insights, you can make informed decisions that work in your favor.
As we look ahead to the broader housing market trends of 2025, expect a refreshing shift toward more traditional home price appreciation, offering hope for increased affordability. Steve and I explore the intersection of interest rates, inflation, and wage growth, and how these elements might be influenced under a new presidential administration. We shed light on the wage growth disparity between job changers and stayers, offering a nuanced view of the economic landscape and its implications for home affordability.
Our conversation wouldn't be complete without addressing real estate market concerns, particularly the rising insurance premiums in disaster-prone regions like Florida. We stress the importance of engaging with insurance agents early in the homebuying process to avoid unexpected costs. Lastly, we proudly share our expertise in residential mortgage lending across Southeastern states, extending an invitation for personalized guidance. Reach out to us for support as you embark on your homebuying journey, and remember to like, rate, and review our podcast if you find our insights helpful.
To help you to navigate the home buying and mortgage process, Jonathan & Steve are currently licensed in Tennessee, Florida, Georgia, South Carolina, and Virginia, contact us today at 423-491-5405 or visit www.jonathanandsteve.com.
This is Benchmark Happenings, brought to you by Jonathan and Steve from Benchmark Home Loans. Northeast Tennessee, johnson City, kingsport, bristol, the Tri-Cities One of the most beautiful places in the country to live. Tons of great things to do and awesome local businesses. And on this show you'll find out why people are dying to move to Northeast Tennessee and on the way we'll have discussions about mortgages and we'll interview people in the real estate industry. It's what we do. This is Benchmark Happenings, brought to you by Benchmark Home Loans and now your host, christine Reed.
Speaker 2:Happy New Year, everybody, and welcome to 2025. My special guest today is the Steve Reed owner-proprietor of Benchmark Home Loans. Steve, thank you for being here today.
Speaker 3:Thank you for having me. I thought you would never ask, so I feel pretty honored to be here today.
Speaker 2:Well, your schedule is pretty busy and it's hard to get you to commit to doing a podcast, so I really appreciate it and I know that those listening are going to appreciate this podcast too. So, today being January of 2025, so happy new year, everybody, and I'm just so excited about what this new year is going to bring and also our new presidential administration. Daddy's home, so yeah, absolutely so. But today we're going to talk about all things first-time homebuyers and I think that's you know.
Speaker 2:We do a lot of podcasts on this episode, steve, but sometimes I think it's just great for us to really get to the very basics of everything from affordability to market outlook to common mistakes that first-time home buyers make, and you know what? I think? Sometimes it's things that we take for granted just because we've been in the industry for so long. I know you've been here for many years and there might be things that you say that the first-time homebuyer might really don't know, but we might assume that they do know. So we're going to just start with from scratch. So let's just start with with some of the mistakes that you see first-time homebuyers make. What would be some of those steve?
Speaker 3:well, first of all, thank you for not telling everyone how long I've been in this industry I didn't want to do that that would have been a bad way to to start 2025 here, but uh oh you look, you're just.
Speaker 2:You're so handsome beauties and I they behold.
Speaker 3:Well, you're only uh 39 right, 39 years old baby in In my mind Looking good honey. Thank you, thank you. So what a timely time of the year really to be doing this episode, just because I feel like over the last couple of years, when we started seeing this about middle of 2022, the rates interest rates really started ramping up, knocked a lot of first-time homebuyers out of the market.
Speaker 3:And nothing has really gotten much better over the last call it two and a half years, going on three years. So it's really a timely podcast for today just to be able to talk about this, and my goal here would be just to help first-time homebuyers get back into the market, because we know there's so much demand. We know they want to buy a house. They're even the ones that may have the income to buy a house. They're afraid. They're afraid. They've watched these prices go up so much and so quick. Am I going to buy at the top and then prices are going to come crashing down. So we'll talk a little bit about that. But to answer your question as far as mistakes they make, and just to talk about a few major ones, the first one that comes to my mind really is when we see them not choosing a realtor or choosing the right realtor, or lender.
Speaker 3:Well, I'll get to that. So the lender is another mistake. But the realtor you know, when you're going to start looking at property, you really should have a realtor that kind of understands how to interact with a first-time homebuyer. You're going to probably want to look at more properties. You're going to need to consider more loan options, so they're going to need to be really hooked up with a lender that caters to first-time homebuyers. So really, should you know to get started, you should choose your realtor wisely. And then, you know, then comes the lender. So definitely choose a lender wisely. You want to go with a local lender, not some national company that because they've advertised an interest rate that's one eighth of one percent lower than anything else you've seen. So shopping just based on interest rate is a huge mistake that a lot of first-time homebuyers make. So those are two, but you know the other things would be not doing your homework, not studying. You know you need to know a little bit before you go into this.
Speaker 2:And so what would be some things? Let's kind of go back to choosing the realtor, one that will cater to a first-time homebuyer. So I'm first-time homebuyer and I see like there are so many. How am I going to know who's going to cater to me as a first-time homebuyer? What are the things that I'm going to look for?
Speaker 3:Yeah, that's tough because it is kind of as Tarzan says, it's a jungle out there. That's tough because it is kind of as Tarzan says, it's a jungle out there. So there's more information on the Internet than ever before, but I feel like we're the most confused we've ever been as a society than ever before, because there is so much information, a lot of it is legit.
Speaker 3:A lot of it is not. If I'm just trying to put myself in a first-time homebuyer's shoes, the first thing I would do if I know a good lender that I'm already comfortable with that I trust then I would ask that lender you know who's good with first-time homebuyers, but the chances are you're not going to have a lender yet, probably so you know, plan B would be finding a friend, a co-worker, a relative that's recently purchased a house.
Speaker 3:Hey, who did you use for a real estate agent? Were you happy with them? And then go talk to them and maybe that'll be your one, maybe it won't. You'll have to go, maybe have conversations with two or three different realtors. I never push doing that, though, because if you're comfortable with the first one and you feel really kind of at ease with them and you feel like they're going to take care. If you feel that connection and that trust. I don't say go interview three. I say go with the first one, if that works.
Speaker 2:Go with your gut.
Speaker 3:Go with your gut. If you don't feel that great about it, then that's okay. Go to the second or the third or the fourth, whatever it takes, but you know, definitely sit down and talk with them and make sure. Probably one of the most common complaints that I hear when it comes to real estate agents and you know most folks are happy with their agent but one of the most common things is, you know, they just wanted to show me a house and me buy the first house.
Speaker 3:They didn't want to listen to my needs list or what I wanted with in regards to a property, and so I think just the listening aspect of it if you're a real estate agent and you know someone's going to listen to you as the first time home buyer, I think that's hugely important. So you know, find that right real estate agent. Same goes with the lender. You know, if you sit down with a lender and they're just giving you the high points of kind of what a loan process would look like or what the rate would look like, hey, here's your rate. Have a nice day. You know we never do that. We always go.
Speaker 3:We either meet in person or do a Zoom call with all of our clients and we want them to understand the market. A knowledgeable client is a great client for us. We don't want a client that where we can just lead around. We want someone that we feel like we can empower them to make their best financial decisions. So we love knowledge, even when they come in with some good knowledge Now, when they come in when they've just read something Rocket Mortgage said last week on the Internet that's kind of a dangerous client because they think they know more than they do, but people that truly try to study and try to learn a little bit about the market.
Speaker 3:hey, it's a great fit for us, but I always recommend doing that. But Get with the lender that you feel comfortable with. That's going to walk you through those programs, like we do on the Zoom call or the in-person meeting, and give you options, and not someone that tries to push you into one option or the other. Because we try to present the material in a way and I'll tell clients hey, if it were me or if it were my kids, here's what I would tell them to do. But I never say, hey, this is, you know you should do this or you shouldn't do this. We just try to present it in a way that's going to show them how they can help their overall financial picture get better through this mortgage and through owning real estate.
Speaker 2:Sure I think about too. Steve is this day and age and, as far as a millennial and younger, I go to Google reviews. So if I look someone up, whether it be a realtor, lender, I mean I'm going to look at Google reviews, I'm going to talk to my friends, my coworkers and to get that lead, because I know that your business a lot of it is word of mouth People that send you you've done a loan for them. They send you their children, their grandchildren, their friends, and that's how your business grows is happy clients, happy families. So anyway, I just wanted to throw that out there. I'm glad you did.
Speaker 3:I'm glad you did, because that that's an excellent thing to do. A lot of times, before I transact any business, don't matter if I'm buying a case of paper clips sometimes I'll I'll go look at a google review.
Speaker 3:so, and and how minor is that compared to the monumentous task of getting a mortgage, I mean? So you should really do a Google review If you're looking at a mortgage lender. I always tell my clients and sometimes they'll say well, we've talked to a few different lenders. I'm like well, if you feel comfortable with all of us, then go to the next step. Look at some reviews, look at what other people have to say about us. We're very proud of our reviews, and the reason we're proud of them is because, from the time we interact with that client for the first time until they get the keys to their house, we're thinking in our minds. We want them to be happy with us, we want them to be elated that they came to Benchmark and we want them to give us a good review. So we put a lot into getting good reviews and it shows, and so, uh, but yeah, I should have mentioned that myself, but I'm glad, glad you brought that up, because that is a that is a huge way to.
Speaker 2:I pay attention, I live with you, right? Any other things that you want to add to that, steve, that we could maybe talk about? Maybe not a mistake, but as guidance for that first-time homebuyer.
Speaker 3:Well, there's no substitute for preparation. And I've changed over the years. I used to tell folks when they were looking for houses and they would say, hey, I'm going to buy a house in six months. I would be like, well, call me when you're 30 days out and we'll get your loan approved. And now I'm just the opposite. Over the years. I'm like, if you're going to buy in two years from now, go ahead and call me so I can kind of inform you where the market's at, what you need to do. You may have an old credit card that didn't get paid, that needs to be updated on the credit bureau. That could take 90 days or whatever. So when we have time in our favor, you're going to get a lot better outcome from getting the mortgage and maybe time to even raise your score, get a better interest rate. So the time is now. If you're planning to buy in the next couple of years, go ahead and connect with us, hopefully, or with a lender where you can kind of get just a baseline of where you're at.
Speaker 2:Right, I think that's great advice, and especially with everybody wants to come to East Tennessee and there's so many people moving here and people that come from other states and they have cash and so it's hard to compete with those cash buyers and our inventory is low and I know we're working on that, but anyway. So, yeah, absolutely, it doesn't matter if it's five years or two years. Correct, contact you and you can help. So what are some? Can you explain what makes up home affordability and where we are currently in terms of affordable housing?
Speaker 3:Sure, home affordability the last couple of years it's kind of like an oxymoron, I guess, like jumbo shrimp there's really no such thing so it's gotten really tough. But if we look at it on a micro level and the way economists talk about affordability which does make a lot of sense but you may have never heard it put this way but there's three basic factors of home affordability. A lot of people think it's just home prices. Well, I can either afford the home or I can't. But when economists look at this home affordability index, which is pretty tough right now, I mean it's, you know, the home affordability is not the best, comparatively speaking over the historical averages, but it's getting a little bit better. So there's three factors that go into home affordability. One, as you would guess, is price, the second factor is interest rates and the third factor is wages. So what have we seen the last couple of years? Well, we've seen prices. You know, gosh in 2021,.
Speaker 2:I think, 20%.
Speaker 3:In a lot of markets. We've seen double-digit appreciation rates, and so what are we seeing now and what's forecasted for 2025? We're starting to see those double-digit appreciation levels go back to single digits more. The historical norm of home appreciation is about 3.5% to 4%, and so we're seeing that go back to that average. So it's getting a little easier there. Ok, so if we take number two, let's take interest rates. We're seeing interest rates. They're not going down in a straight line, but the inflation numbers are getting a little bit better, and so interest rates are forecast to be a little bit better. We'll talk a little bit more about that if we have time.
Speaker 3:And then wages. You know wages year over year. I saw a really interesting graphic. Today was talking about job changers versus job stayers, which I never really even heard that term. Stayers, which I never really even heard that term. But job changers, their wages are up about seven and a half percent, whereas job stayers wages are up about four, which both are pretty good right. So you're seeing wages up, rates on the cusp of starting to trickle back down.
Speaker 3:You're seeing home prices leveling out out and you're seeing a little bit more inventory come to the market, so which makes for easier negotiation, maybe getting sellers to pay closing costs again, who knows. But so you're seeing those three factors. I'm not saying it's just so easy to go out and buy a house today. It hadn't automatically. We didn't wake up this morning and you know you could just go out and buy a house that you couldn't afford yesterday. But things are headed in the right direction, I think. With the administration that we have coming into power on January 20th, I think things will get a lot better from the inflation standpoint. But you know, even an administration can't control everything. It's consumer confidence, consumer demand. There's a lot of things that go into it, but it really looks like home affordability overall is going to get better for 2025 and 2026. So that should be encouraging to young families who want to buy a house.
Speaker 2:That is encouraging and I love the. You know we did a conference back several months ago, brought in Dave Childers, and it was just amazing information that you know I had not seen before in the amount of data that they showed. So I know that's something that you shared with a lot of your realtors. So if you're a realtor listening you don't have that information, contact Steve for that. But so let's talk about interest rates, steve, because everybody, what's your rate? What's your rate? What's the outlook for 2025?
Speaker 3:Well, the outlook is better and you know, when we were sitting here this time last year, we were a little bit more confident that hey, come may or june, and a lot of economists even had that penciled in on their calendars hey on may 10th, the rates are going to go down and you know, like fools we went out and broadcast that a little bit, but we, we tried to keep it to a minimum.
Speaker 2:You were still cautious, though.
Speaker 3:Very cautious. I'm always cautious because these guys don't have a crystal ball and we have to be cautious now. We learn a little bit every year, you know.
Speaker 2:And.
Speaker 3:I feel like we learned from last year don't pencil in a date that rates are going to get better, or even a month, but all the metrics do point to inflation numbers being better. There's one part of inflation that's really hurt us. There's so many things that goes into the CPI and the PPI for inflation and one of the numbers is shelter cost and shelter cost. It's a lot of different areas. Its shelter costs could be how much you pay for your mortgage payment, how much you pay for rent, how much you pay for a hotel when you go spend the night in the hotel. So hotel costs were so outrageous they were really factoring into the shelter costs, raising inflation a lot. Well, those are starting to moderate, some as well. So we're seeing those shelter costs come down now. That's not 100% of those inflation numbers, but it is a factor in there. It's a percentage and I can't remember what percentage shelter cost is, but it's a pretty good percentage. And so, as we see that moderate inflation moderates, that will help interest rates and so I don't think we're going to wake up again and all of a sudden it be super low.
Speaker 3:But I do think toward the end of this year we're going to be back in the high 5% range, maybe mid fives, and you know we're mid sixes now, mid to high sixes now, so that's not a huge, huge drop off in rates. I mean, it helps. Every little bit helps and demand is better when the rates are under six. So I think we'll probably see the rates fall under six. The home prices won't go up as quick. We're going to see more on the market and so I think that all bode pretty well. But for those that are just on the fence waiting for you know, just to you know, get up one day and hey, I'm now. My house payment's five hundred dollars less than it would have been last week.
Speaker 3:I just don't, that's not going to happen but as these wages grow, makes it to where that home's more affordable for you as well. Between that, rates moderating a little bit and prices steady.
Speaker 2:Okay, well, and I think that it all boils down to don't wait for an interest rate to drop to buy your home. If you find a home that you fall in love with, please see Steve or Jonathan, get your preapproval, have your plans in place.
Speaker 3:Or Brittany or Lauren if you're in Knox in place, or Brittany or Lauren, yeah.
Speaker 2:Brittany or Lauren if, in Knoxville market, go ahead and get that pre-approval and don't be afraid to get that loan, because when interest rates do drop you can always refinance, but it's going to be harder. So let's talk about the concerns for the real estate market in 2025. So let's talk about the concerns for the real estate market in 2025. And then, what are you excited about in the real estate market in 2025?
Speaker 3:Well, those are great questions and you'll be shocked about what I'm concerned about. You'd probably be thinking I'm concerned about rates or prices or whatever. But I tell you, what I'm really concerned about is and it's not as much in our market, although it could be, could come to Tennessee and other areas but you know we're licensed in Florida and South Carolina and Virginia and Arkansas and Kentucky, so we're licensed in about seven states. But my biggest concern are insurance premiums in these markets. We've had these natural disasters and you know, one made it 1,500 miles up here to our little mountain town, right, and it was Hurricane Helene. And these insurance companies are going to base their premiums on risk, right. So they're not going to forget these natural disasters Already.
Speaker 3:In Florida what we're seeing is a lot of insurance companies just packing up their bags and leaving the state and not doing. They're not necessarily going out of business, but they're shutting down business in Florida. So with that you've got less competitions for the insurance companies. You're stuck with who you can get and that drives up premiums. So you know, I've heard of a lot of places in Florida where you've got $5,000 to $10,000 a year insurance premiums. Wow, you know you start talking $800 to $1,000 a month for insurance If you're in a condo. The HOAs are going outrageous. Florida has a new requirement this year that condos over 30 years old have to have these foundation inspections.
Speaker 3:Well, you know they've already determined some of those are sinking and it's an astronomical cost to try to deal with those, especially the high rises. So insurance is going to be a big deal moving forward. I would be personally scared to death to buy something on the coast right now just because of that.
Speaker 2:And this is focusing in the Florida market everybody Not anywhere else, but right now just Steve's talking about Florida.
Speaker 3:I'm talking about Florida, but I'm also talking about riverfront property here that got wiped out and the river took on a new path. So I think you have to be careful, I think, when you're purchasing a home now and it's not rocket science, but you can make a call to the insurance agent before you go under contract and say what's this insurance going to cost me?
Speaker 3:And there's very few around here. Like you say, this is kind of mostly Florida, but there are some, you know, norzechy River properties here. That would worry me a little bit and you know, with the flood zone is probably the maps are going to change, so that would be my biggest concern. I'm not worried about what most homebuyers are worried about. Oh, I'm afraid I'm going to buy at the top of the market. That does not worry me. Historically real estate is going to go up, maybe at a slower pace than it's been.
Speaker 2:Great investment.
Speaker 3:It's still a great investment. So I think now you have to maybe be a little bit more savvy. Even though I'm in this business, I don't remember ever calling to find out what my insurance was. If I wanted a house. I wanted a house, I just want to know what's my payment, what's the rate? What's the price of the house? But now I think you might want to take an extra step and have a really good insurance agent that can help guide you through, because it might in some cases, be properties that that you want to stay away from, that's going to have some hidden cost, um, that you know.
Speaker 3:It'd be way better to find out up front. So so that's, that's a long answer to what you know what I'm concerned about in the real estate and that's not huge. Like I say, that's a very small percentage of our properties here, like you mentioned, mentioned. Yes, very thankful, but in Florida not so much. You know that's a pretty good portion of the property.
Speaker 2:So what's exciting about the market for 2025, Steve.
Speaker 3:Well, I think exciting is just seeing I love dealing with first-time homebuyers and you know I love helping anyone plan for their financial future, so it don't have to be a first-time homebuyers, and you know I love helping anyone plan for their financial future, so it don't have to be a first-time homebuyer. But a first-time homebuyer is special to me and I love being able to sit down with them and watch the excitement from buying their first house and helping them save money on that, walking them through the process, them save money on that, walking them through the process, taking away their fear of the process and knowing that I've got their back and.
Speaker 3:I've got them covered and we can do this together, and so that's been missing the last two or three years. It's been missing since about mid-2022, like we spoke about earlier. So now I'm kind of seeing that glimmer of hope for first-time homebuyers getting back in the market, and that is hugely exciting to me because it's been for lack of a better word kind of a boring market to me the last couple of years because it's just been going through the motions. You know you have some guy buying a house from California which hey, we love those too but you know he's buying it and paying 50 percent down and it's his 15th mortgage and he don't feel like he needs us and you know that kind of thing. So to be able to see these first time homebuyers coming back in the market, where, where I can use my expertise to help them make a difference in their families lives, that is what I love.
Speaker 2:Right, that's, that is exciting, and so what are some? We're going to wrap up. Steve, I think this has just been well number one timely, great information, thank you, and I hope that we can do some updates. But what about some closing remarks before we end the episode?
Speaker 3:Yeah. So just want to encourage everyone to go into this year optimistic about buying a home. Don't write yourself off A lot of loans we do. Folks will think, well, I can't buy a home, or I can't afford this house, or I can't afford to buy a house in my situation. You know. Get with us and let us look at your situation and tell you what you need to buy a home. Stop paying rent and putting the money in your landlord's pocket. Go ahead and take the step. It's really something you'll never regret, and so I would just encourage anyone out there looking to just take that first step and the rest will make easy for you. So, Christine, thanks again for having me, and we'll hopefully continue this on our next podcast with not only first time homebu buyers but just the market in general.
Speaker 1:This has been Benchmark Happenings brought to you by Jonathan Tipton and Steve Reed from Benchmark Home Loans. Jonathan and Steve are residential mortgage lenders. They do home loans in Northeast Tennessee and they're not only licensed in Tennessee but Florida, georgia, south Carolina and Virginia. We hope you've enjoyed the show. If you did make sure to like, rate and review. Our passion is Northeast Tennessee, so if you have questions about mortgages, call us at 423-491-5405. And the website is wwwjonathanandstevecom. Thanks for being with us and we'll see you next time on benchmark happenings.
