Despite news that the real estate market is improving in certain markets – as well as the corresponding evidence of increasing interest rates and home sale prices – some states are still plagued by foreclosures.
Depending on where transferees are moving from, or where they are moving to, this can have a negative or positive impact on his or her willingness to relocate.
Transferees and their families moving to states with a high foreclosure rates could be at an advantage because of the ability to purchase homes for less than the areas they are leaving; however, those transferees attempting to sell homes in high foreclosure areas may experience additional challenges, including selling their homes for less than the original purchase price due to lower appraisal values and finding buyers who do not meet requirements to secure mortgages.
According to Worldwide ERC’s most recent report, the 2012 U.S. Transfer Volume and Cost Survey, organizations continue to be challenged with employee reluctance to relocate.
The top two reasons for employee reluctance to relocate are “slowed real estate appreciation/depressed housing market at the old location,” (reported by 91 percent of respondents) and “transferee’s old location home is in a negative equity situation” (reported by 86 percent of member organizations).
It is apparent that the unsettled real estate market continues to play a significant role in impacting how employees perceive moving.
Global mobility managers challenged with reluctance can spin the negative perception into positive if employees are leaving a market with housing prices on the rise and moving to one with rising foreclosures. The most recent indicators have real-estate markets in Arizona, California, Georgia and Michigan performing well.
States performing the worst include Florida, Nevada, Ohio, Maryland and South Carolina.
For companies wanting to relocate employees from these areas, global mobility managers can take steps to lessen the impact of the real-estate market through the many services offered by employee relocation companies such as Lexicon.
Some tips include:
Home staging: Homes should be move-in ready. Lexicon clients can take advantage or expert home staging services to maximize the positive attributes of homes for sale and address any negatives discovered when showing the home to potential buyers. Read a few of our case studies here.
Affinity rewards: Available in most states and dependent on client policy, many home sellers and buyers are eligible for cash-back program rebate from the selling and purchasing of a home. For example, under the Lexicon Affinity program if you sell a home for $400,000 - $499,999 you would receive $1,800 cash back.
Mortgage Assistance- Benefits include market-competitive interest rates, reduced loan origination fees, access to professional counselors, instant pre-approval, enhanced qualification parameters, reduced documentation, and streamlined approval and closing process. Learn more now.
In addition to the above tips, employee relocation managers should caution transferees moving into these five states to make sound purchasing decisions. Consider location, amenities, condition and future resale of the home when buying in these markets. A decision based solely on price can impede future relocations when re-posting a home for sale.
Predictions for the market’s future?
After hitting a 75-month low in April 2013, U.S. foreclosures rose 2% in May and bank repossessions jumped 11%, according to data released Thursday by RealtyTrac, a real-estate data firm. The increase comes after five straight months of declines.
Those that have managed to hold on to their properties through the downturn are faring better.
The number of U.S. mortgage holders who owe more than their homes are worth fell below 20% in the first quarter, according to CoreLogic, from 21.7% at the end of last year. “The negative-equity burden continues to recede across the country, thanks largely to rising home prices,” Anand Nallathambi, president and CEO of CoreLogic, said in a statement.
The specter of further foreclosures persists, however.
“The foreclosure problem was not resolved; it was simply delayed,” says Daren Blomquist, vice president at RealtyTrac. He expects this to continue until the banks catch up with the backlog of delayed foreclosures. Banks are repossessing more homes precisely because higher prices are making it easier for them to unload the properties. Blomquist says, “but the recovery has strengthened most local markets enough to quickly shake off a few more blows from these nagging foreclosures.”