This is a 2 part blog post series on 2008 relocation trends.
In last week’s recruiting blog poll, the results showed based on the current employment market and economy 52% of organizations have increased their relocation benefits offered to new hires and transferees while 41% cited they have not changed their relocation benefits this year.
With over $32 billion spent annually, relocation is big business. Based on research, here is a summary of several current trends:
- Remember the stimulus rebates? The fact that the rebates phase out at these income levels has caused some companies to wonder whether, if taxable relocation benefits put the transferee into or above the phase-out income level, the company should consider compensating the transferee for the loss of the benefit of the rebate. According to the ERC, in general, companies should not do so.
- “Short sale,” “foreclosure,” “negative equity,” and “loss on sale” are benefits that employers are now generally including in their relocation program, when assessing their competitiveness. These benefits have varying degrees of tax consequences. In depth research is recommended to make a sound decision in developing and implementing policies for dealing with these issues in a real estate market like 2008.
- Even if home prices decline as expected, the volume of relocations in North America will rise in 2008. Experts cite corporate growth as the main reason for the increase.
- The top 5 foreclosure states last year included California, Florida, Texas, Ohio, and Michigan. These 5 accounted for more than 50% of the nations foreclosure filings.
- Fewer companies are leaving real estate marketing decisions up to relocating employees. A recent study shows that more than 60 percent of companies provide employees with a list of brokers to choose from when listing their property, and nearly 60 percent also require employees to follow restrictions on listing prices.
- Loss-on-sale assistance is provided by about 70 percent of companies, and their caps range from $10,000 to $275,000. Although the real estate losses have been costly, companies are not likely to scale back employee relocations.
- The trend of relocation payback agreements continues to increase, with the agreement period ranging from 12-24 months.
Relocation is an important consideration for both organizations and new hires and as competition to recruit talent increases, especially for specialized or niche roles, you may need to address your current offering. The economy and real estate market almost demand it.