How Relocation Assistance Supports Millennials, Gen Z, and Employers
With rising home prices and high interest rates making homeownership feel out of reach for many Millennials and Gen Zs, offering relocation assistance could be a game-changer for both achieving their dreams and attracting top talent.
Despite Challenges, Millennials and Gen Zs Continue to Plan for Homeownership
Millennials and Gen Zs certainly know it’s a tough market to buy a home today:
- A recent study by Intuit Credit Karma, based on a survey of over 1,000 U.S. adults, found that nearly one in five respondents who have never purchased a home plan to receive financial assistance from their parents to buy their first home.2
- A similar finding suggests that more than one-third of home buyers from Millennial and Gen Z generations seek financial help from parents to put together a down payment per Redfin.3
- A 2024 KB Home and Harris Poll, which surveyed adults across generations, showed that 40 percent of Millennials and Gen Z think about buying a home “at least once a week but feel impeded by current housing market conditions.” 4
- When asked about their savings, 63 percent of Gen Z non-homeowners reported having less than $10,000, compared to just 25 percent of Millennials.5
Frustration over U.S. housing prices continues to affect all generations hoping to purchase, as home prices rose for the 15th consecutive month in September 2024, with the national median sales price increasing 3% from the previous year to $404,500. The median sales price is 49 percent higher than it was five years ago, before the pandemic. By comparison, wages grew only 25 percent in the same period, noted Lawrence Yun, the National Association of Realtors chief economist.6
But there are different options companies can take to help younger employees become first-time home buyers when asked to relocate for their company.
Supporting Relocating First-Time Home Buyers
Despite the statistics above and a steep 4.2 year-over-year increase to home prices,7 there are signs of progress. Among all home buyers in the U.S. in 2023, first-time buyers accounted for approximately 32 percent of the total – up from 26 percent in 2022 – per Statista Research Department.8
Even in the current corporate cost-cutting environment and with somewhat volatile markets, many companies are in a unique position to make a lasting, personal, and memorable impact on relocating employees who rent, with a relatively small investment in providing renter-to-homeowner benefits.
New Home Closing Costs
Over the past few years, NEI’s seen a trend toward companies helping renters in the form of home finding assistance and destination new home closing costs. This is often a capped amount based on employee level or policy tier. Average closing costs for a buyer can run between about 2 and 6 percent of the loan amount. The national average closing costs for purchasing a single-family home come to $6,905 including transfer taxes (and $3,860 without) according to data from CoreLogic’s ClosingCorp.9
Note on closing costs and N.A.R. Litigation – 2024: Based on recent litigation and class-action settlement agreements, buyers must sign an agreement with a real estate agent that represents their interests. A buyer may ask the seller to pay concessions to offset the amount, though the buyer is responsible if the seller does not agree. Reimbursement is considered taxable income.
Proactive Counseling on Options
Relocation management professionals and vetted mortgage providers often play a critical role in helping Millennials and Gen-Zs navigate the complexities of home buying. By offering tailored guidance, they can address common misconceptions, highlight available financial incentives, and steer young buyers away from costly mistakes. Below are key areas where expert advice can make a significant difference.
- A common myth held by Millennials and Gen-Zs is that downpayments are a minimum of 20 percent. Of these two generations surveyed by the KB Home and Harris Poll above, only 36 percent were aware that less money can be put down. Younger buyers need to understand what incentives their lender, as well as various loan programs including FHA and VA, has to offer and this includes down payment assistance.
- Millennials and Gen-Zs may want to waive home inspections to buy a home, but this is not recommended and can have serious consequences later. Inspections offer valuable information about a property’s condition, safety and potential maintenance needs and allow for informed decisions to negotiate effectively.
NEI carefully counsels employees to avoid future property eligibility concerns such as excessive acreage, environmental issues or building/material defects to help mitigate risk as well as manage the emotional ups and downs of buying a home, negotiations, and the impact of the NAR settlement changes.
Preferred Mortgage Lender Benefits
When using NEI’s preferred mortgage lenders, we can enhance relocation benefits for relocating renters by offering direct billing of allowable loan costs, at no additional cost to either the client or the transferring employee. This service includes elimination of junk fees and pre-negotiated costs to manage our clients’ overall costs while providing enhanced services to our clients and their employees. Based on a predetermined list of allowable loan costs (which vary by client policy), lenders are instructed to cover these costs at closing and bill NEI directly. After auditing the charges against the policy, NEI reimburses the lender for eligible costs. Employees are responsible for any costs not covered by their benefits, but they are not required to file an expense report. It's important to note that any costs billed directly to NEI are considered taxable income and will be grossed-up if the policy allows. This streamlined process adds value by reducing the administrative burden on employees and ensuring clients can offer a seamless, cost-effective relocation experience.
This topic is especially relevant today, as NEI partners with national mortgage lenders daily to help make first-time homeownership a reality.
“In addition to reducing the financial burden of paying common and customary home purchase costs at the closing, U.S. Bank’s worked to make the entire process as easy as possible for young professionals looking to purchase their first home,” said Chris Douglas, AVP, Relationship Account Manager at U.S. Bank. “We’ve built out a portfolio of mortgage products tailored to the unique circumstances that surround a company-sponsored move and we've built a team and a suite of resources to provide guidance on navigating the differences of renting a residence versus purchasing one and how to make an educated, successful financial decision.”
NEI’s iSelect® Program
To give relocating renters choice and the option to pursue homeownership, an increasing number of companies are using progressive core-flex policies like NEI’s iSelect® when the policy doesn’t differentiate between homeowner or renter at the move’s origin location. iSelect® plans allow transferees to dynamically select relocation flex benefits in accordance with their policy with the aid of a budgeting tool to help them work within budget cap amounts. For many, core-flex plans are a no-brainer—empowering relocating renters who aspire to homeownership to choose benefits that support their goal, while providing companies a practical way to manage costs. A true “win-win” strategy.
Lock Out from the “Lock-in Effect”
Chen Zhao, Redfin’s economics research lead, believes it may be difficult for mortgage rates to dip below the mid-5 percent range except if there is a full-blown recession: "With no recession, a longer-term neutral rate is basically around 5.5 percent," Zhao said. "It's very possible that mortgage rates will be in the lower sixes by the end of this year…”
"It's going to be a combination of rates coming down a little bit to a level that feels more acceptable and also people feeling more necessitated to move,” said Zhao, who’s optimistic conditions could improve for homebuyers.10
In short, rates are unlikely to return to pandemic lows, currently hovering about twice as high as they were in 2021 (when they hit a low of 2.65%). As a result, many homeowners are experiencing a 'lock-in effect,' where they're reluctant to sell their home and purchase another due to the higher mortgage rates—impacting inventory. The higher rates are even giving some first time homebuyers pause, with a surprising 54 percent of surveyed Gen Z and Millennials incorrectly believing rates are at an all-time high11 (historically, rates peaked at 18.63 percent in 1981).
With inventory low due to the 'lock-in effect' and first-time homebuyers hesitant from sticker shock, many companies are encouraging top talent to relocate by partnering with experienced relocation management teams that offer reassurance and essential support throughout the homebuying process.
Brainstorming Tailored Solutions for Each Unique Client
Despite perceived obstacles and concerns, 90 percent of Gen Z prospective homebuyers believe they will purchase a home before age 35, with 33 percent expecting to be homeowners by 25. 10
Helping relocating employees achieve these milestones requires a delicate balance between supporting individual goals and meeting broader talent management objectives. NEI understands this dynamic and works with clients to proactively address new trends and program changes that support recruitment, retention, and relocation goals. By offering tailored solutions that help renting employees fulfill their homeownership ambitions, we also help increase offer acceptances and demonstrate that companies are treating employees fairly. As a true business partner, NEI collaborates with clients to provide unique solutions that align with company culture, budget, and business objectives.
To discuss how we can support your goals, please reach out to your NEI Global Relocation representative at any time.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
5: https://nowbam.com/60-of-gen-z-worry-theyll-never-afford-a-home/
7: https://www.nar.realtor/infographics/existing-home-sales-housing-snapshot
8: https://www.statista.com/statistics/208072/share-of-first-time-home-buyers-usa/
12: https://nowbam.com/60-of-gen-z-worry-theyll-never-afford-a-home/
How Relocation Assistance Supports Millennials, Gen Z, and Employers
With rising home prices and high interest rates making homeownership feel out of reach for many Millennials and Gen Zs, offering relocation assistance could be a game-changer for both achieving their dreams and attracting top talent.
Despite Challenges, Millennials and Gen Zs Continue to Plan for Homeownership
Millennials and Gen Zs certainly know it’s a tough market to buy a home today:
- A recent study by Intuit Credit Karma, based on a survey of over 1,000 U.S. adults, found that nearly one in five respondents who have never purchased a home plan to receive financial assistance from their parents to buy their first home.2
- A similar finding suggests that more than one-third of home buyers from Millennial and Gen Z generations seek financial help from parents to put together a down payment per Redfin.3
- A 2024 KB Home and Harris Poll, which surveyed adults across generations, showed that 40 percent of Millennials and Gen Z think about buying a home “at least once a week but feel impeded by current housing market conditions.” 4
- When asked about their savings, 63 percent of Gen Z non-homeowners reported having less than $10,000, compared to just 25 percent of Millennials.5
Frustration over U.S. housing prices continues to affect all generations hoping to purchase, as home prices rose for the 15th consecutive month in September 2024, with the national median sales price increasing 3% from the previous year to $404,500. The median sales price is 49 percent higher than it was five years ago, before the pandemic. By comparison, wages grew only 25 percent in the same period, noted Lawrence Yun, the National Association of Realtors chief economist.6
But there are different options companies can take to help younger employees become first-time home buyers when asked to relocate for their company.
Supporting Relocating First-Time Home Buyers
Despite the statistics above and a steep 4.2 year-over-year increase to home prices,7 there are signs of progress. Among all home buyers in the U.S. in 2023, first-time buyers accounted for approximately 32 percent of the total – up from 26 percent in 2022 – per Statista Research Department.8
Even in the current corporate cost-cutting environment and with somewhat volatile markets, many companies are in a unique position to make a lasting, personal, and memorable impact on relocating employees who rent, with a relatively small investment in providing renter-to-homeowner benefits.
New Home Closing Costs
Over the past few years, NEI’s seen a trend toward companies helping renters in the form of home finding assistance and destination new home closing costs. This is often a capped amount based on employee level or policy tier. Average closing costs for a buyer can run between about 2 and 6 percent of the loan amount. The national average closing costs for purchasing a single-family home come to $6,905 including transfer taxes (and $3,860 without) according to data from CoreLogic’s ClosingCorp.9
Note on closing costs and N.A.R. Litigation – 2024: Based on recent litigation and class-action settlement agreements, buyers must sign an agreement with a real estate agent that represents their interests. A buyer may ask the seller to pay concessions to offset the amount, though the buyer is responsible if the seller does not agree. Reimbursement is considered taxable income.
Proactive Counseling on Options
Relocation management professionals and vetted mortgage providers often play a critical role in helping Millennials and Gen-Zs navigate the complexities of home buying. By offering tailored guidance, they can address common misconceptions, highlight available financial incentives, and steer young buyers away from costly mistakes. Below are key areas where expert advice can make a significant difference.
- A common myth held by Millennials and Gen-Zs is that downpayments are a minimum of 20 percent. Of these two generations surveyed by the KB Home and Harris Poll above, only 36 percent were aware that less money can be put down. Younger buyers need to understand what incentives their lender, as well as various loan programs including FHA and VA, has to offer and this includes down payment assistance.
- Millennials and Gen-Zs may want to waive home inspections to buy a home, but this is not recommended and can have serious consequences later. Inspections offer valuable information about a property’s condition, safety and potential maintenance needs and allow for informed decisions to negotiate effectively.
NEI carefully counsels employees to avoid future property eligibility concerns such as excessive acreage, environmental issues or building/material defects to help mitigate risk as well as manage the emotional ups and downs of buying a home, negotiations, and the impact of the NAR settlement changes.
Preferred Mortgage Lender Benefits
When using NEI’s preferred mortgage lenders, we can enhance relocation benefits for relocating renters by offering direct billing of allowable loan costs, at no additional cost to either the client or the transferring employee. This service includes elimination of junk fees and pre-negotiated costs to manage our clients’ overall costs while providing enhanced services to our clients and their employees. Based on a predetermined list of allowable loan costs (which vary by client policy), lenders are instructed to cover these costs at closing and bill NEI directly. After auditing the charges against the policy, NEI reimburses the lender for eligible costs. Employees are responsible for any costs not covered by their benefits, but they are not required to file an expense report. It's important to note that any costs billed directly to NEI are considered taxable income and will be grossed-up if the policy allows. This streamlined process adds value by reducing the administrative burden on employees and ensuring clients can offer a seamless, cost-effective relocation experience.
This topic is especially relevant today, as NEI partners with national mortgage lenders daily to help make first-time homeownership a reality.
“In addition to reducing the financial burden of paying common and customary home purchase costs at the closing, U.S. Bank’s worked to make the entire process as easy as possible for young professionals looking to purchase their first home,” said Chris Douglas, AVP, Relationship Account Manager at U.S. Bank. “We’ve built out a portfolio of mortgage products tailored to the unique circumstances that surround a company-sponsored move and we've built a team and a suite of resources to provide guidance on navigating the differences of renting a residence versus purchasing one and how to make an educated, successful financial decision.”
NEI’s iSelect® Program
To give relocating renters choice and the option to pursue homeownership, an increasing number of companies are using progressive core-flex policies like NEI’s iSelect® when the policy doesn’t differentiate between homeowner or renter at the move’s origin location. iSelect® plans allow transferees to dynamically select relocation flex benefits in accordance with their policy with the aid of a budgeting tool to help them work within budget cap amounts. For many, core-flex plans are a no-brainer—empowering relocating renters who aspire to homeownership to choose benefits that support their goal, while providing companies a practical way to manage costs. A true “win-win” strategy.
Lock Out from the “Lock-in Effect”
Chen Zhao, Redfin’s economics research lead, believes it may be difficult for mortgage rates to dip below the mid-5 percent range except if there is a full-blown recession: "With no recession, a longer-term neutral rate is basically around 5.5 percent," Zhao said. "It's very possible that mortgage rates will be in the lower sixes by the end of this year…”
"It's going to be a combination of rates coming down a little bit to a level that feels more acceptable and also people feeling more necessitated to move,” said Zhao, who’s optimistic conditions could improve for homebuyers.10
In short, rates are unlikely to return to pandemic lows, currently hovering about twice as high as they were in 2021 (when they hit a low of 2.65%). As a result, many homeowners are experiencing a 'lock-in effect,' where they're reluctant to sell their home and purchase another due to the higher mortgage rates—impacting inventory. The higher rates are even giving some first time homebuyers pause, with a surprising 54 percent of surveyed Gen Z and Millennials incorrectly believing rates are at an all-time high11 (historically, rates peaked at 18.63 percent in 1981).
With inventory low due to the 'lock-in effect' and first-time homebuyers hesitant from sticker shock, many companies are encouraging top talent to relocate by partnering with experienced relocation management teams that offer reassurance and essential support throughout the homebuying process.
Brainstorming Tailored Solutions for Each Unique Client
Despite perceived obstacles and concerns, 90 percent of Gen Z prospective homebuyers believe they will purchase a home before age 35, with 33 percent expecting to be homeowners by 25. 10
Helping relocating employees achieve these milestones requires a delicate balance between supporting individual goals and meeting broader talent management objectives. NEI understands this dynamic and works with clients to proactively address new trends and program changes that support recruitment, retention, and relocation goals. By offering tailored solutions that help renting employees fulfill their homeownership ambitions, we also help increase offer acceptances and demonstrate that companies are treating employees fairly. As a true business partner, NEI collaborates with clients to provide unique solutions that align with company culture, budget, and business objectives.
To discuss how we can support your goals, please reach out to your NEI Global Relocation representative at any time.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
5: https://nowbam.com/60-of-gen-z-worry-theyll-never-afford-a-home/
7: https://www.nar.realtor/infographics/existing-home-sales-housing-snapshot
8: https://www.statista.com/statistics/208072/share-of-first-time-home-buyers-usa/
12: https://nowbam.com/60-of-gen-z-worry-theyll-never-afford-a-home/
