US property market: Challenging times for relocating employees

A nationwide shortage of rented housing has caused rent in the US to rise. The impact of this is being compounded by incomes that are close to pre-recession levels. This is creating a market so challenging for relocating employees that some are refusing a job transfer, says Bill Graebel, CEO of Graebel Companies.

US property
The US real-estate market has been on a parallel course with the improving economy for several years. Here, we have witnessed double-digit increases in homeowner and tenant activity in 2015.This strong uptick can be attributed to a variety of reasons – most notably customers' decisions to take advantage of record-low interest rates before the US Federal Reserve's anticipated hike, which may happen at any time and prompt the banking community to increase lending rates.Residential investment is a key factor in a recovering economy. The Reserve has been cautious about raising rates prematurely, because low interest rates in a stronger economy with low unemployment can rapidly produce inflation.The influx of Millennials into the housing market is a major factor in many parts of the US. More than two-thirds of household growth in the next five years is also expected to come from Millennials.Today, about 65 per cent of first-time buyers are Millennials aged 25–34, with 86 per cent saying that their motivation is a changing family size.According to the BMO Harris 2015 First-Time Home Buyers Report, first-time buyers, including Millennials, have increased their purchase budgets by 24 per cent over 2014. Interestingly, Millennial buyers may search properties online, but use a real estate agent the most of all US buyers when purchasing their homes.For clients' relocating employees, including assignees unfamiliar with the new city, and to successfully and quickly integrate them within the community, it is imperative for the relocation management company and its recommended supplier to provide a highly personalised service driven by up-to-the-minute market knowledge.Also driving home ownership is a US-wide shortage of housing to rent. New construction slowed dramatically during the recession, and has not kept pace with demand.The number of US households that rent a home has increased by 26 per cent since 2007, and now totals 11.25 million. Naturally, supply and demand has caused rents to skyrocket.According to Census data, more than one in four US tenants pays at least half of their family income for rental housing and utilities. Data from Zillow and the US Labor Department indicate that rent increases across the nation have jumped to almost twice the pace of average hourly wages.The Harvard Joint Center for Housing Studies recently reported that the nearly 20 per cent of tenants earning from $45,000 to $75,000 annually were among those spending 30 per cent or more of their monthly income on rent.Incomes have remained flat, close to pre-recession levels. These factors have limited the ability to save money for down payments, which in turn has caused more tenants to stay put and face ever-higher rental costs, and in some cases to refuse a job transfer.For further information about Graebel Relocation, please visit: more Re:locate news and features on the US, click here and for more on Commercial Property, click here.Click here to read the full digital issue of Re:locate magazine Autumn 2015Download the Relocate Global App by searching for "Relocate Global" at the Apple iTunes App Store or the Google Play Shop now. If you're a Relocate subscriber, you can get the latest content by logging into the App using your subscriber email address and the password "relocate".  If you're not a Relocate subscriber, you can register now for a digital subscription, which will also give you access to all of our App content.

Related Articles