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Trends Impacting Mobility Program Budgets and the Home Buying & Selling Experience

Meeting the Challenges of Today’s U.S. Real Estate Market

Exploring the trends impacting U.S. real estate and solutions to managing program budgets while creating exceptional home buying and selling experiences.

This is Part I of a two-part blog series about U.S. real estate trends. Part II focuses on changing real estate agent relationships and commissions structures – check it out here.  

Over the last several years, we’ve been working closely with clients and families to navigate the U.S. real estate market, which has changed considerably since 2020. Gone are the days of low interest rates and the mass exodus from city centers as employees adjusted to working from anywhere. 

Instead, today’s market is characterized by higher interest rates, homes prices and rental costs. Despite the challenges, mobility professionals can still help mobile employees accept relocations and transact with confidence, through information-sharing and benefits support. 

Here are insights for mobility managers seeking to guide mobile employees toward smart decisions during the home purchase process. 

Trends Shaping the U.S. Real Estate Market 

Before getting into actionable solutions to overcoming today’s U.S. real estate market challenges, let’s first look at the trends shaping the market – keeping in mind real estate is localized, and every market is different. 

  • Higher mortgage rates: During the pandemic, mortgage rates dropped to historic lows, dipping below 3%. With the Federal Reserve seeking to control inflation in the years since, mortgage rates have jumped to more than 7%. For mobile employees who locked into a sub-3% mortgage rate, the prospect of giving it up and buying a new house at today’s rates – and potentially spending thousands of dollars more each month – has led to some delayed relocations while awaiting a better housing market. However, it’s important to point out that interest rates are on a downward trajectory: they’ve dropped from their 20-year high in late 2023, and lenders expect rates will continue to drop, even if just slightly. Additionally, many current homeowners have built up equity over the last few years with low interest rates, which can fund the increased costs of purchasing a new home. 

  • Low housing inventory: Rising interest rates, pandemic-delayed housing development and population growth have led to low housing inventory. Fewer options mean multiple buyers vying for the same property, driving up home prices. Not only are mobile employees paying higher interest rates, they’re likely also doing so on bigger loans. Keep in mind that as soon as interest rates drop, more people will be open to buying and selling. When demand increases, so will housing prices. 

  • Increased cost of renting: It’s not just homeownership costs that have increased. Average rental prices are nearly 30% higher than they were before the pandemic, with single-family rental prices specifically jumping more than 35%. Depending on the origin and destination cities markets, renting may not be the more affordable option for mobile employees, especially if home purchase benefits are included in the relocation package to lower the costs of buying a home. 

Home Purchase and Sale Solutions for Successful Relocations  

As evidenced by Graebel’s 2023 State of Mobility Report, talent mobility can help companies meet their goals, retain top talent and create a competitive edge. Therefore, mobility professionals should encourage mobile employees to accept relocations and help employees feel supported and confident in making the right home buying and selling decisions. Here are three steps to consider: 

1. Inform Mobile Employees of the Realities of Today’s Real Estate Market

For mobile employees to make smart home purchase choices, they need to understand what’s happening in the market and how those influences impact their relocation. They should have a grasp on “the new normal” – higher home prices, less homes to choose between and normalized interest rates, meaning rates that are higher than in 2020 but historically average. 

Relocation management companies (RMCs) have a depth of knowledge and networks of vetted supplier partners, including lenders, that can guide mobile employees through the home purchase process and make it easier, more efficient and more attainable. These lenders have training, expertise and experience specific to supporting relocating employees, which helps mobile employees make informed, smart decisions that lead to positive relocation experiences – while also helping mobility professionals manage program costs. 

Here are a couple ways lenders can serve as valuable allies in the process: 

  • Expectation setting. Lenders should be part of conversations about homebuying attainability and actual costs. These partners can help counter common misconceptions that convince mobile employees they can’t afford to buy – like that you have to put 20% down or that you need a 750+ credit score to qualify. 

  • Cost-saving programs and incentives. Lenders often have relocation-specific programs and incentives that create cost savings for mobile employees and mobility programs. For example, Graebel lenders typically offer special closing cost incentives and mortgage rates that are a quarter point lower than non-relocation lenders. Combine that with Graebel programs – like our program that caps lender fee closing costs, helping save thousands of dollars – and mobile employees will benefit financially from working with recommended partners. 

2. Analyze Program Data and Budgets with Relocation Management Partners 

In today’s business climate, mobility managers often can’t simply increase budgets to include additional housing benefits in mobility programs. Working with RMCs to analyze program data and take a strategic approach to benefits decision-making can help mobility professionals balance program costs with creating exceptional employee experiences

Here are a few questions to analyze with RMC partners: 

  • What’s the breakdown of our prior relocations between the origin and destination cities? What does the data from those relocations show about which housing benefits are most and least valued that we can apply to future moves between those cities? 

  • What percentage of positions were we able to fill without additional home purchase benefits? Do you recommend adding housing benefits to attract top talent for positions that are still open? 

  • If additional housing benefits would help fill positions, what are the capabilities – and budget parameters – to increase or change benefits? 

  • What benefits can or should we cut or adjust to find money for housing benefit tradeoffs? Which benefits are under-utilized or don’t seem to add value? 

  • What’s our trend on housing exception approvals? Should we make those a regular benefit? 

3. Explore Policy Adjustments to Supplement Current Housing Benefits 

In most cases, we find that mobile employees who receive home purchase benefits amplify the perceived value of the relocation package, often staying with their companies longer. This type of benefit can also attract top talent. Given these advantages, mobility professionals should use the insights gathered by analyzing program data to explore policy adjustments, as feasible. 

Collaborate with RMC partners to determine which options may work for your mobile population and program budget. Here are six policy adjustments to consider: 

  • Location flexibility. Rather than relocating to a major market that’s likely more expensive, is it possible for the mobile employee to move to a nearby suburban or rural area and work a hybrid schedule? That allows the mobile employee to buy in a more affordable market while still meeting the needs of the role. 

  • Cost-of-living adjustments/allowance (COLAs). A COLA is a benefit that helps mobile employees maintain a certain standard of living in their destination location by accounting for differences in the cost of living between origin and destination cities. This could be a good option if a family is moving from a more affordable to a more expensive market. Beware, though, that there are areas where prices continue to increase, with no end in sight. In those instances, it may mean tapering COLAs to protect the mobility program budget. 

  • Mortgage interest differentials assistance (MIDAs). With this benefit, companies would pay the difference between the mobile employee’s new and old mortgage rates for a set amount of time. This gives employees time to settle into the new home without the immediate stress of a higher mortgage rate. 

  • Mortgage resets. Mortgage resets protect homeowners if they’ve already purchased a destination city home but aren’t able to sell their origin city home. Once the origin city house sells, lenders will put the proceeds toward the destination city home loan, without having to refinance. 

  • Loss-on-sale (LOS). For some homeowners who purchased at the peak of the pandemic-era bidding wars, they may not be able to recoup what they paid when listing their home. In these instances, companies may cover all or some of the loss-on-sale – meaning the difference between the sales price and original purchase price, not including any capital improvements.  

  • Home purchase benefits for renters. Since renting isn’t necessarily the cheaper option, especially for longer-term relocations, home purchase benefits can help those renting realize the goal of buying a house. Direct bill benefits for down payments or closing costs – where lenders send the invoice to the RMC on behalf of the mobile employee – can be a persuasive benefit, as the mobile employee doesn’t need to bring cash to the table; it’s directly covered by benefits, rather than paid by the mobile employee and then reimbursed after closing the sale. 

  • Renovation loans. With low inventory, mobile employees may have to buy a house they don’t love, deterring the desire to relocate. To entice those mobile employees and help them fall in love with their home, consider providing renovation loans. This compromise could convince them to accept the relocation and provides the opportunity to create their dream home. 

There are plenty of options mobility managers can evaluate for how to best support mobile employees buying and selling homes in today’s U.S. real estate market. While company leaders may be concerned about potentially increased costs, mobility professionals should remind them of the value of the investment. The housing market is cyclical – it’ll cool off, like it always has – but companies will always need to do business, which necessitates relocations. Ensuring that mobile employees have a positive relocation experience is an excellent investment with big rewards. 

Contact us to learn more about how we can help you analyze the best options for your mobile employees and mobility program budget. 

Members of the Graebel Partner Alliance Lending Network provided insights that supported the development of this content.  

About the Author

As Executive Vice President, Bill Nemer oversees Graebel operations in the Americas. With more than 30 years of experience in the relocation industry, Bill has held a variety of leadership positions in operations, client relations, network management, quality and process management and thought leadership. He is a frequent speaker and moderator at industry events and serves on a WERC relocation management company subcommittee, most recently focusing on helping the industry navigate impacts and solutions to changing real estate professional commissions.

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