A depressed housing market coupled with high unemployment has many companies reducing the number of employees they transfer between cities.
As a rule, employees won’t relocate if they have to take a hit on their house, and in today’s economy, many companies aren’t willing to make up the difference.
“Now, in the interview process, they’ll ask you what’s the status of your home and how much you owe,” said Kimberly Smith, president of Avenue West Corporate Housing. “Employers can’t discriminate on a lot of things, but there’s nothing to protect you from (being asked) what your home is worth and what you paid for it. The candidate that has less attachment to real estate gets the job.”
Not all companies are hesitant to relocate employees. Xcel Energy relocated about the same number of people through June as it did over the same period last year, but relocations between July and now are down about 20 percent over that period in 2008, said Barbara Hartwick, director of employee care for the company.
Xcel, which operates in eight states, also continues to offer a home-buyout option. The company has three appraisals done and offers the average to the employee.
“The only thing that’s changed is where people have expectations that the home is valued at more than the market,” Hartwick said.
It costs an average of $76,600 to relocate a current employee homeowner, but just $22,112 for the same worker who rents, according to Worldwide ERC, a workforce-mobility association. Companies spend an average of $61,929 to relocate a new-hire homeowner, but just $18,355 for a new-hire renter.
“If a company is making a move and they have a choice between a homeowner and a renter, the renter moves to the top of the list, all other things being equal,” said Tom Cryer, a broker with The Kentwood Co.
Companies spend about $24 billion a year in the United States relocating employees, according to Worldwide ERC.
This year, however, about 66 percent of companies said they have cut back on relocating employees, and only 5 percent expect an increase, according to a survey by Cartus, a provider of global employee relocation and workforce development services.
Some employees are still moving, though.
Bill Sullivan, vice president of customer services for Philips Healthcare, landed in Denver about two weeks ago, his 14th move in 23 years. Sullivan opened Philips’ Denver office about two years ago, but it took him until this month to sell his home in Seattle — and he still lost about $75,000 on the sale. It was the foreclosures and short sales in the area that killed him.
“I wasn’t competing with like property,” he said.
Still, Sullivan was lucky. Earlier this year, Philips implemented a policy to help offset the loss in home value for the senior-level employees it relocates.
“Our company has a very solid reputation for relocation and employee assistance,” Sullivan said. “I was the beneficiary of a very timely policy change. If they weren’t able to do that, I wouldn’t be able to buy a house here.”
These days, more people who are relocated to Denver are more likely to rent than buy because they can’t sell their existing homes and it’s tougher to qualify for a loan, said Dolores Mozer, relocation director for Fuller Sotheby’s International.
“We’ve changed and now do destination services,” Mozer said. “We’re working with people who are going to rent and helping them find rentals. Eventually, we’re hoping they will be able to buy.”
While the number of domestic relocations has plummeted, many companies are increasing the number of employees they move overseas, said Bill Graebel, president of Denver-based Graebel Relocation Services Worldwide.
“If 50 percent of a company’s earnings is in the United States and they’re flat or declining, you can increase your presence in markets outside the U.S.,” Graebel said. “There is some acceleration of companies putting the right people on the ground in other markets to stimulate growth faster to offset the contraction in the U.S.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
