In the domestic relocation industry a growing trend being seen is the increase in involuntary renters. In the past, relatively few homeowners became renters. When they did, it was often a lifestyle choice, such as empty-nesters who sold their large suburban home and moved into a city apartment. Today this situation is much more common -- and too often an effect of the current housing market and economic conditions. Some transferees cannot sell their departure home and end up renting it out and finding a rental property at the destination. That is not the only scenario. Others expect their time at the destination to be limited and want to keep their original home for their return. Still others may have been spooked by the volatile housing market in general.
The most delicate employee relocation situation centers on what we call "involuntary renters" or "reluctant renters". These are homeowner transferees who manage to sell their home but cannot afford to buy another one. Overall, 67% of surveyed companies in Worldwide ERC's 2010 Transfer Volume and Cost Survey are seeing a "somewhat" to "significant" increase in the number of homeowner transferees who are opting to rent at their new location. Worldwide ERC's 2010 Transfer Volume and Cost Survey found that a whopping 88% of surveyed companies said their employees complained that their old-location home is in a negative equity situation. As a result, many employers have stepped up loss-on-sale benefits and other home-sale benefits to facilitate sales of departure homes. At the destination end, domestic employee relocation mortgage partners may offer opportunities for low down payments and favorable terms such as VA and FHA financing.
But for some transferees the gap is too large to bridge, even with enhanced home-sale and home-purchase benefits. With so much home equity lost in recent years, transferees who do manage to sell their homes might not only absorb a substantial loss (even with loss-on-sale assistance), but also find themselves without the means to buy a new home. If they happen to be moving to a geographic area with a higher cost of living, the situation becomes even more challenging.
Homeowners who are transitioning into renters represent a new category of transferee, with greater and more specialized needs than classic renters, but fewer (and less costly) requirements than homeowners who are continuing as homeowners. This creates new challenges for employers and domestic relocation services companies. But it also creates an opportunity. By recognizing and addressing these specialized needs through policy, employers can facilitate a difficult relocation process, reduce stress and stigma and potentially save a great deal of money in the future.
Real estate partners play a critical role in the domestic relocation process in that they can help facilitate a "soft landing" into an appropriate rental property. They should possess deep knowledge of local rental options. They need to be thoroughly briefed on the family's needs, whether it is for a modest apartment or a larger-to-luxury home in a prestigious neighborhood. Fortunately the variety and quality of rental stock is better than it once was, given the many unsold homes in new developments and condo complexes and increased builder activity in this space before the economic downturn.
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If you're looking for professional corporate relocation services, TRC Global Solutions offers comprehensive employee relocation packages for companies of all sizes for over 25 years.
http://www.trcgs.com
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