It’s safe to say that the summer of 2022 was largely spent speculating whether the US economy was already in a recession (and how quickly the global economy would feel the same sting). While politicians, economists – and leaders across virtually every industry – still differ on whether to refer to these as recessionary times, it’s hard to ignore the soaring costs of…. everything. It’s impacting our grocery bills, the price at the pump, the housing market, and, unsurprisingly, the cost of relocating.
At our recent Annual Client Strategy Summit (affectionately dubbed #WeichertSummit), we had the opportunity to engage in meaningful discussions with some of our top clients and partners, diving into the key challenges impacting our industry today and how to overcome them to drive success in the years ahead. Naturally, cost containment was the hottest topic, with 75% of respondents agreeing that the recession is likely to increase reluctance to relocate.
With the accelerated pace of business, an ongoing talent shortage, spiking interest rates and surging property values, I offered a “remix” analogy, taking the old Glen Campbell song “Rhinestone Cowboy” and imagining a modern-day collaboration between a rhinestone bikini-clad Lady Gaga and Nelly; essentially taking proven solutions for overcoming reluctance and modernizing them. If that wasn’t enough to capture your attention, check out this list of smart, budget-savvy ways you can use your mobility spend to protect the employee experience, particularly during a time when uncertainty levels are higher than usual:
- Paying COLA
- Expanding home sale programs to new hires
- Reintroducing MIDA/Buydowns
- Converting a miscellaneous allowance to an “exception allowance.”
- Restoring loss on sale
- Paying an ‘incentive” to rent in the new location (with a 2-year rental subsidy)
- Rationalizing benefits between homeowners and renters to allow more flexible destination housing options
- Hibernating eligibility for home purchase benefits
- Using commuter programs and remote work
- Using more local plus or one-way/permanent moves
- Covering pre-payment penalties in Canada if employees can’t port their loan to the new location
- Using sign-on bonuses
Regarding sign-on bonuses, participants agreed that the advantages (easy for recruiters) don’t outweigh the disadvantages (don’t relate to the relocation costs, don’t get tracked as relocation expenses, and get fully taxed therefore reducing the effectiveness of solving relocation challenges).
One company examined their solution for moving critical talent to Vancouver – a destination with the distinction of being one of the highest price cities in North America. To overcome reluctance to relocate, the employer provides down payment assistance and a housing allowance for two years. Some of the cost comparisons (+20%) resulted in substantial payments, but they deemed it necessary to get vital talent to this high-priced market.
Other “remix” solutions included leveraging buydowns to make mortgage rates more affordable. One company suggested it is time to “dust off” loss on sale provisions as employees that purchased a home at the height of the market – often paying way over list price and waiving inspections just to get into a property – will be looking for assistance to pursue a relocation assignment.
Across the board, participants claimed to be looking holistically at the reluctance to relocate. One person compared it to a game of Jenga: “You can’t add a new log only to destabilize another part of your program.” For instance, if you provide down payment assistance, ensure you have a 2-year clawback/repayment agreement. Like with so many things, it’s about striking a delicate balance. In this case — offering the support to help employees navigate current relocation hurdles, but being smart about the type of support, opting for targeted solutions that have shown proven success.
When asked what their most significant stressors were, the vast majority of participants cited uncertainty and the recession. Suppose necessity truly is the mother of invention. In that case, there’s no better time to embrace the “remix” mentality – let’s tap into our trusted toolbox and infuse a little creativity to appeal to the modern mobile employee and overcome any recession-related relocation challenges.
And, of course, if you need a little help with remixing from a Rhinestone Cowboy to a Tastefully Accessorized Corporate, we’re always here to chat.
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