Right now, inflation in the US economy is feeling a little like an overtired toddler: impossibly stubborn. Even as gas prices fell in August, inflation refused to follow suit, rising an uncomfortable 8.3% from a year earlier. This means that the moderation that we’d been holding our breaths for, has yet to arrive, and prices for rent, healthcare, food, and goods continue to soar at a rapid pace.
And that much-anticipated housing market softening? Arguably less stubborn! After a year of double-digit gains, housing prices are dropping, but many of the largest markets remained overvalued and inaccessible thanks to high mortgage rates and low levels of inventory. All this is to say, mobility professionals are being challenged to get creative in terms of relocation budgets and protecting the mobile employee experience.
In the first and second installments of this blog post, I broke down how soaring inflation, a booming housing market, and sky-high mortgage rates are impacting mobility, and shared some of the savvy responses embraced by other companies to do more with less. Now I’m exposing the real secret sauce – based on research and anecdotal evidence from our Advisory Services Team – to conquering affordability concerns, helping your mobile talent navigate these sticky markets successfully, and overcoming a reluctance to relocate.
At Weichert, we’ve certainly seen an increase in requests from companies looking for solutions to their affordability challenges. Some companies allow employees to rent for a defined period prior to purchasing a home (typically within one year). Others have begun to dust off their Mortgage Subsidy programs and Mortgage Interest Differential Assistance (MIDA), and are looking at newer products to support the initial purchase:
A MIDA benefit may help ease employee concerns related to the financial impact of accepting a move at a time when the cost of financing could be considerably higher. With the ability to customize a MIDA program/benefit, employers have the ability to set cost-containment parameters that align with their overall mobility program, while enticing key talent by offsetting some initial negative financial impact associated with the purchase of a new home.Michael Baldyga
A subsidy benefit can also be transferred to a new loan should market conditions improve and the employee refinances into a lower note rate during the benefit period. This flexibility can help further offset the overall financial impact of increased finance costs.”Michael Baldyga
If you’re thinking about adding a formal approach to high housing costs, here are the top best practices that balance supporting your employees and reinforcing cost containment for the company:
What goes up, must come down, bringing hope that the rate of inflation and mortgage rates will eventually slow. But a nationwide drop is unlikely to happen without a substantial economic shift. Let us know about any changes that you’re making to your program to assist employees in purchasing a new home… Just look for our welcome mat outside the door!