Employee relocation is a vital part of the economy. Talent mobility helps businesses continue to scale and enables employees to achieve their lifestyle goals and advance their professional development. With the current global shortage of temporary housing, companies have another challenge to face when relocating employees, but with additional planning companies and employees alike can still relocate successfully.
Reasons Behind the Temporary Housing Shortage
Strong demand for temporary housing is the most significant reason, as more people require this housing option compared to the number of housing units available. Coupling the fact that the demand may not drop for some time and producing more housing takes time, the shortage is expected to continue.
Other reasons behind the temporary housing shortage include:
- During the early part of the pandemic, when relocation activity essentially stopped, temporary housing providers gave up large numbers of apartments, aligning their inventory to meet the much smaller demand. It will take some time to rebuild that inventory.
- The real estate sellers’ market of the past few years meant that fewer properties have been available for relocating employees to purchase. Prices have been high and competition stiff. Many transferees have multiple offers rejected before finally landing a home. This, of course, extends their time in temporary housing, slowing the normal turn. This also applies to renters, who face unaffordable rents and longer searches for a suitable property.
- The peak season for temporary housing has been extended, meaning people who got into these temporary housing arrangements are staying in them for longer periods. Additionally, more people are booking temporary housing for what would have typically been considered “off-season” use.
- The chronic labor shortage is making it difficult for temporary housing providers to manage and maintain properties and prepare them for guests.
All of these factors are causing significant concern for employers and employees looking for temporary housing, but the high cost for available housing and ongoing challenges with labor shortages are also impacting the situation. Everything that has happened in the last couple of years has created a perfect storm of problems for those needing temporary housing options.
What the Shortage Means for Organizations
Any organization planning on relocating employees that require temporary housing should plan moves as early as possible. That is especially important for international relocations, but even domestic moves can have unforeseen challenges that would never have been a concern before 2020.
Organizations and their employees will also need to make quick decisions on housing instead of taking more time to think it over. Waiting could lead to employees missing out on the right kind of adequate housing for their needs, and in some cases, could mean that an employee cannot relocate because proper temporary housing is simply not available. Not only is that a problem for the employee, but not being able to relocate an employee could cause setbacks for an organization that is trying to expand.
Household Goods Delays Aggravate the Temporary Housing Shortage
Household goods carriers are suffering from their own issues, including a chronic driver shortage and continuing disruption from the pandemic. Particularly for international household goods shipments, there are still significant delays. The situation is improving slowly and should get better into 2023, but planning as early as possible is advisable.
Delays in the delivery of household goods feed the temporary housing shortage. If an employee is relocating and cannot get their household goods, that could mean an extended stay in temporary, furnished housing. This is inconvenient for the employee, costly for the employer and a problem for others needing temporary housing.
Companies may want to consider adding an option to rent furniture to their company policies for relocating employees or encouraging employees who are moving to a new country to choose a furnished rental instead of taking their household goods with them. Increasing the checked bag and air shipment allowances are other ways for companies to make relocation easier for their employees.
The Bottom Line for Employee Relocation During a Housing Shortage
There are signs the real estate and rental markets will moderate somewhat in 2023. Household goods carriers are gradually working though logistics issues and port backups and temporary housing providers are rebuilding inventory. All of this could take some pressure off the temporary housing industry. Still, the temporary housing shortage is likely to continue for some time.
Relocation management companies are helping clients to develop workarounds to keep moves on track and reduce stress. Theoretically, some relocations might be delayed until conditions improve, but that is usually not realistic for companies with immediate business needs.
Companies that are aware of domestic or global relocation needs many months in advance can find housing and shipping options that will work for their employees, including furnished rental properties in the host country, extended-stay hotels, and relaxed air shipment requirements.
There may be an improvement in the temporary housing market through 2023 and into 2024, but wise organizations and employees will not make any assumptions and will take the right steps to make sure they can relocate when needed.
