In the face of a possible recession, inflated housing prices and still-increasing interest rates, homeownership is moving further and further away for many Americans. Is employer assistance part of the solution?

In the face of a possible recession, inflated housing prices and still-increasing interest rates, homeownership is moving further and further away for many Americans. Is employer assistance part of the solution?

In 2020, 30% of all households had what was considered “unaffordable” rent or mortgage payments, according to Harvard University’s annual State of the Nation’s Housing report. Two years later, the problem has only worsened — home prices rose another 20.6% from March 2021 to March 2022 and rents jumped 12%. As a result, one out of every five employees plan to delay buying a home due to their financial status, according to SoFi’s recent Future of Workplace study.

“The affordability issue is well outside of [employees’] control,” says Barrett Scruggs, director of workplace financial wellbeing at SoFi at Work. “And what we’re seeing is this group of people are now expecting or asking or hoping for their employer to do more to help them.”

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Sixty percent of employees said that they wanted their company to add, improve or expand on homeownership assistance benefits, according to SoFi’s report. A more realistic first step to offsetting the costs of housing expenses, Scruggs says, is expanding existing financial wellness programs to help shore up workers’ financials, such as student loan repayment, automatic savings programs and financial wellness coaches.

“With student loan programs, an employer is contributing some amount of dollars on a monthly basis to employees’ debt, so that employees can put that dollar amount away in a savings account and stash away enough for a down payment on a house,” Scruggs says. “[A financial coach] can teach employees how to free up cash flow in their budget and help them figure out how to best navigate that homebuying process.”

Despite the need for more direct forms of support, the only kind of housing assistance Scruggs tends to see is relocation services that point employees in the direction of third-party resources to help them find airfare or movers at a lower price point, but that doesn’t actually assist with the act of finding housing.

For Gen Z employees in particular — who are struggling to make rent payments in the current financial landscape — those solutions simply aren’t enough to make any real long-term impact on their journey toward hopeful homeownership.

“Many of my friends are in their mid-20s and living in cities [where] rent is expensive and homeownership feels like an impossibility,” says Meagan Loyst, 25, founder & CEO of Gen Z VCs, a collective of Gen Z founders, angel investors and VCs. “But many Gen Zers want to own homes.”

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Last year, Loyst polled nearly 300 Gen Zers in her community and found that 90% had aspirations to be homeowners. Many young venture capitalists, she says, are on the hunt for companies that make housing — particularly homeownership — more accessible.

“I’d like to see employers working with startups that are tackling real problems in the space, especially for younger employees, if they have a B2B sales motion,” Loyst says. “For example, rent payments that build toward home ownership for Gen Z.”

The idea for this is similar to how an employee would contribute a portion of their income to their 401(k), except there’s an option to dedicate a portion of their income to future homeownership, where employers can match employees’ contributions. That kind of innovation, Loyst says, could make a real change in the way younger generations perceive homeownership in the current market.

That pitch stands as a more modern take on existing employer assisted housing benefits, which help employees access homebuying support and loans that can be forgiven over the tenure of an employee’s time with that organization. These offerings, however, are far from widespread.

The affordability crisis is also paired with a deficit of approximately 3.8 million homes, according to Habitat for Humanity, adding a new and complex layer for employees even just looking for somewhere to settle down.

“The bad news is that whatever we’re feeling right now is still only going to get worse,” says Carlos Abisambra, president and CEO of Travelers Haven, a short-term apartment rental agency. “The last time [vacancy rates] were this low was 1984 —  almost 40 years ago. Even if all the construction that is happening at this point in time were finished today it still wouldn’t be enough.”

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The move to virtual work did a lot to free corporate employees, with many newly remote workers becoming digital nomads and moving to smaller, more rural communities in the midst of the pandemic. For industries that rely on short-term but essential workers, the influx of these new residents to smaller locales added a fresh layer to the housing crisis.

Travelers Haven, which works primarily with essential workers looking for short-term housing — whether nurses called to short-staffed hospitals or construction workers — had to cancel many contracts in recent weeks because they simply couldn’t find enough available housing for their clients.

“We’ve seen employers get creative,” Abisambra says. “In the hospitality business where employees are coming in for entire seasons, we’ve seen employers partner with college campuses while students were away for the summer, or with senior living facilities with vacancies.”

But those options are not sustainable long-term — meaning all workers, regardless of short- or long-term housing needs, will continue to face financial pressures. Scruggs predicts that employers will eventually have to make homeowner assistance a permanent part of benefit offerings to support their staff and attract talent.

“Inflation is one of the top concerns on America’s minds right now,” Scruggs says. ” And that fear is not going to go away in the very near future and it will continue to drive a certain expectation employees have from their employers.”

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