You’ve arranged the airplane tickets, rental home and new car for your mobile employees. But your job as a mobility manager isn’t done quite yet. It turns out that employees actually want a whole lot more out of the relocation process than an itinerary stating their flight time and new address.
That’s the latest discovery from our recent research paper that offers revealing insight from the perspectives of all of the key stakeholders in any relocation–from the employees being moved to the corporate managers and business unit leaders who are moving them. It’s a project that makes sense; after all, the more we know exactly what our clients and their mobile employees want out of a move, the better we can ensure the entire process is a sweeping success for all parties involved.
And while both companies/clients and mobile employees have a lot riding on a relocation, research shows that mobile employees are often the most vocal stakeholders. After all, they’re the ones packing up their bags, families and lives. And if they’re not happy with the process, their companies will be left grappling with frenetic employees obsessing over the relocation as opposed to focusing on their new role. And that’s a perfect recipe for soaring stress and plummeting productivity. Continue Reading →
Similarly, the mood is generally positive, as is the latest real estate report: fewer distressed properties, fewer foreclosures, continued appreciation.
Speaking of hot, that’s a word your local Realtor might use to describe the real estate market. In fact, we’re seeing a lot of emerging “hot spots” across the United States—areas that are experiencing favorable real estate market conditions. Sure, questions remain. How long will the trend last? When will the Fed raise the interest rates? What impact will that have? When will supply increase to cool off appreciation? When will TRID be an afterthought?
We have no choice but to wait. As the answers unfold, let’s enjoy what summer has to offer. Here are some market highlights from the National Association of Realtors (NAR):
Normally around this time of year, we start having internal discussions about why the real estate market activity has been sluggish or why transfer volumes are not as anticipated. For the past two years this was a short discussion and the convenient scapegoat has been “the weather” and the “slow winter season.”
This year, however, I would be hard pressed to call the market sluggish and I could not possibly in good conscience blame the weather. With employment steady and home sale activity strong (up 11% from a year ago) the spring market looks like a favorable one for most mobility programs, provided that companies are still implementing our best practices, which include requiring employees to list aggressively at the onset of the marketing period. With a sellers’ market prevailing in most regions, employees can expect robust showing activity which should translate into faster employee sales, provided they are realistic in their asking price.
January, as it turns out, gave up late holiday returns according to the National Association of Realtors (NAR), as sales of existing homes unexpectedly rose to a six-month high—the latest sign that the economy remains on firmer ground despite slowing global growth. Continue Reading →
Fall usually means football and the end of baseball. This fall, all eyes are on the Fed as the threat of an interest rate increase is the main concern. Interest rates are the wild card in the continued slow but steady housing recovery. My view is that housing has “recovered” because 2006 peak prices were never sustainable.
If a rate increase occurs, there are two schools of thought on the potential impact. First is that the increase will reduce purchasing power and snuff out any further chance of continued price increases and demand. The second is that sideline (rate) watchers, those who have contemplated a home purchase, will jump into the purchase market for fear of losing out.
This second scenario will add to what we have largely seen over the past several years as a “rate-driven” demand. When we can get to a point where rate changes are offset by substantive wage growth, and both first time buyers and others can act based on needs, we will have cleared a major hurdle.
A quote from Frank Nothaft, Chief Economist at Corelogic, accurately sums up the current “mood” relative to US Real Estate: “The overall economy has provided mixed signals on its performance so far this year, but one thing is clear: Home sales are off to a brisk start through April. We expect house prices in our national index to be up about 5 percent in the next 12 months, and mortgage rates are likely to move higher over the next year.”
To bolster that claim, Corelogic reported the following on June 9, 2015: “The National foreclosure inventory fell by 24.9 percent year over year in April 2015 to approximately 521,000 homes, or 1.4 percent of all homes with a mortgage. This marks 42 months of consecutive year-over-year declines.”
Additionally and supportive of positive market conditions, CoreLogic also reported (June 8) that distressed sales—real estate-owned (REO) and short sales—accounted for 12.1 percent of total home sales nationally in March 2015, a 3.2 percentage point drop from March 2014 and a 1.9 percentage point decrease from February 2015. At their peak, distressed sales totaled 32.4 percent of all sales in January 2009, with REO sales representing 27.9 percent of that share.
In my day-to-day work with clients and other multinational companies, I’m often asked how to balance cost savings with the additional administrative burden created by enforcing certain program provisions based on a case-by-case analysis.
Let’s take the application of a housing norm as an example. A housing norm is a differential that is applied when a company provides an allowance for housing in the host country, but also deducts a specific amount deemed to be reasonable and customary expenses of living accommodations. It is assumed that a person has the expense of shelter no matter where they live; hence, the term “norm” is used to describe the deduction taken from the housing allowance.
By the same reasoning, the expenses of the home country housing typically disappear when a person goes on assignment, because he or she will either sell or rent out their home, or the company will assume coverage of mortgage and other home country costs.
But what if an employee is unable to sell or rent his or her home and/or the company doesn’t cover the costs of managing the home country property? When does it make sense to have a housing norm as part of a global assignment policy and when is it simply not worth the administrative effort to implement?
The leading indicators weigh heavy on the positive side as summer ends and the (normal) seasonal slowdown commences. Unemployment is improved at 6.1%, 30-year fixed mortgage rates are up but still reasonable at around 4.1%, gasoline prices are at a four-year low, consumer confidence and consumer spending is up slightly and in September, the Federal Reserve committed to keeping the short-term interest rate untouched in the near term.
For employers, this indicates a generally favorable landscape for relocating homeowners and renters and the business climate in the coming months.
More good news was heard when it was reported that FHA would eliminate a prepayment penalty — the interest rate charge — starting next year. For FHA borrowers who pay off their mortgage before the end of the month, the lender is allowed to charge to the borrower the interest rate costs on the loan from the day the loan is retired until the last day of the month. So, if a borrower paid off the loan on Sept. 10, the penalty would be 20 days of interest payments. That can be hundreds of dollars. Once the change takes effect, on Jan. 21, 2015, lenders will no longer be able to apply that interest charge to the borrower. Given the track record of financing challenges presented post-recession, employers should be aware of this positive news for home buyers.
Companies intent on post-recession growth need a mobile workforce agile enough to respond quickly to new opportunities and fill talent gaps across their organizations, according to the results of our latest survey.
Now in its eighth year, the Workforce Mobility Survey has become the definitive guide to emerging relocation trends and best practices. This year’s results reflect the input of approximately 220 corporate relocation managers and HR professionals at North American companies across all major industries.
The majority of survey participants acknowledge that workforce mobility remains critical to achieving business and talent development goals, with one-third expecting their mobility volume to increase over the next twelve months. Mobility is even more important among high growth companies, which, the study showed, not only relocate more employees (an average of 432 annual moves versus 280 for other companies) but are also more effective at leveraging mobility as a strategic tool to recruit, develop and retain key talent.
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Jennifer Connell, Director of our Americas Consulting practice, discusses the survey’s key findings, the importance of flexibility and agility to successful workforce mobility and the lesson we can all learn from high-growth companies when it comes to employee relocation.
It’s ten minutes packed with mobility news and statistics you can use.
More qualified home buyers are being left on the sidelines simply due to their credit scores. That was the big takeaway from the recent Mortgage Bankers Association (MBA) Expo and Conference, where David H. Stevens, President & CEO of the MBA, warned that the secondary market is negatively impacting mortgage affordability and availability, increasing costs for borrowers and even preventing many from obtaining homes, and stifling a full-blown market recovery.
The current average credit score in America today is about 700, while the average credit score of a borrower with a loan backed by Fannie Mae in Q1 2014 is 741. On top of these strict credit criteria, there are loan level price adjusters, overlays and ever-increasing guarantee fees. In this system, according to Stevens, only those with the most pristine credit can afford a home. This clearly indicates that while credit availability for mortgages may have improved since the recession, homebuyers still face “credit challenges.”
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