For today's relocation home buyers, time and money are everything
Understanding and navigating today's mobility market can be challenging. Here's what you need to know.
Navigating the cross currents of talent mobility and ever-shifting real estate market conditions stands firmly among the most complex parts of any mobility manager’s job. Today’s imbalanced market gives home sellers the upper hand in most U.S. destinations and is creating a unique set of challenges. The collision of historically low, although rising, mortgage rates with low inventory and soaring prices sets the stage for a clash between demand and supply that makes red hot commodities of home buyers’ time and money.
The Fed’s recent move to enact incremental rate increases may serve to balance market conditions over time, but recent data reveal home prices are continuing an unabated march to record levels.
Home prices nationally rose 19.2% year over year in January 2022, up from 18.9% in December 2021, according to the S&P CoreLogic Case-Shiller Index. The 10-city composite annual increase was 17.5%, up from 17.1% in the previous month. The 20-city composite rose 19.1%, up from 18.6% in December.
Phoenix, Tampa, and Miami saw the biggest annual gains at 32.6%, 30.8% and 28.1%, respectively. Sixteen of the 20 cities reported higher price increases in the year ended in January 2022 versus the year ended in December 2021. Washington, D.C., Minneapolis and Chicago saw the smallest annual gains, although they were all still up double digits from a year ago.
How to adapt
Considering sharply increasing home values and the need of ordinary home buyers to compete with investors for limited inventory, mobility managers should consider strategies to assist relocating homeowners with purchasing homes at destination.
First, consider the time factor. It is routine today for buyers to bid on multiple properties before landing a contract that sticks. Recognizing that market conditions may increase the time it takes to secure a home purchase, mobility managers may need to enhance or reorganize policy provisions to offer additional support. Such tweaks might include:
Next, consider the money. With more time to purchase also comes more expense, so mobility managers should also freshly consider the allocation of financial resources within their mobility policies as well. Depending on the relative generosity of the program’s current state, shifts can often be made in a cost-neutral manner. Here are potential changes to consider:
Of course, the best mobility policies are those that are well-positioned to operate effectively in all market climates. Given the extreme demands of the current seller’s market, tweaks and changes may be best relegated to a time-stamped addendum or exhibit to the policy. This will help avoid setting a longer-term benefit precedent and give mobility managers control. In all market conditions, the value of mobility benefits should be fully leveraged by requiring employees to engage with preferred brokers and lenders. These professionals are best positioned to assist buyers with navigating the unique time and budget constraints of the destination market.
Read more about how homebuying and mobility trends impact employees and connect with corporate relocation experts and home lending specialists.