Carlos Abisambra shares how renters, homeowners, prospective buyers, and the nomadic workforces are forced to make compromises and seek alternative courses of action when it comes to finding housing.
Throughout this year, and those preceding, the housing market has experienced a period of tremendous fluctuation. At times, depending on the day even, instability has left many wondering whether or not relief will come. Inching mortgage rates, inventory strain and materials shortages have driven the market into at least one discernible bottom line: the cost of housing is on the rise. While conversations surrounding this volatility typically hone in on homebuyers, the impact can be felt in the corporate housing sector as well. Examining the following factors provides a better understanding of the tensions at place affecting nomadic workforces, and how to best realign expectations in the face of market conditions.
The Pricing Connection
Rising home prices weaken buying power of prospective homeowners, pushing some to continue renting. While the rental market is a distinct portion of housing overall, its connections with homebuying are intrinsic. In 2022 the median sale price for homes for the month of July in the United States was $436,300, according to the U.S. Census Bureau. With the median home price exceeding $400,000 and mortgage rates hitting highs not seen since 2008, buyers face an increasingly volatile market. Where are they to go if buying a home is out of reach?
If more homebuyers pause or forgo their searches, inventory can and does shrink. Beyond that, rental vacancy rates have been on an incremental decline for a few years, currently settling at 5.6% according to another U.S. Census Bureau report. Corporate housing in and out of metropolitan areas, at times, depends on a healthy inventory. Nomadic workforces and those organizing their housing may find it difficult to perfectly meet the expectations of a short-term stay.
Short-term housing requires providers to source the right location, at the right price point with proper amenities, utilities, housewares and furniture. Many of these supporting factors are under their own strain, as rents remain high in metropolitan areas and inflation pushes up energy rates. Rents in metropolitan areas reached a peak in the summer of last year, according to data compiled by Apartment List. The same report found that while that trend has since cooled, with month-over-month rents falling by 0.2%, rents are still up 76% from a year ago.
These increases make targeting prime locations for short-term stays more challenging. Additionally, a recent forecast by the U.S. Energy Information Administration predicted the price of electricity will average 14.8 cents per kilowatt-hour for this year, a 7.5% increase from 2021. Circumventing these rate hikes is challenging, but can be done with more proactive budgeting and expectation-setting with clients. In the case of short-term agreements, organizations or individuals are not only paying for the space and duration of stay but those additional touches of customization as well. Additionally, depending on the property, short-term stays operate outside of the most common lease terms and can invite the opportunity for additional charges.
Strategies to Consider
Considerations can be made to best serve short-term rental occupants; however, corporate housing is not immune from the impact of larger economic and market strain. As inventory waffles, processes to coordinate optimal short-term stays become more challenging. Reduced inventory and average housing costs are driving compromise across the housing market, nomadic workforces included. Consider areas where compromise is possible. Are there nonessentials that can be taken out of the equation? Can commute time be extended by a few minutes? Are there additional locations outside of the desired scope that can be examined? Continually evaluating budgets, and anticipating cost increases, is also another important starting point.
Ultimately, untangling these threads within the housing market is key to understanding the extent of their impact. Times of economic contraction lead to shifts in larger behavioral trends. Renters, homeowners and prospective buyers are forced to make compromises and seek alternative courses of action, and the same is true of nomadic workforces. However, they should not be left out of these discussions. As market fluctuations impact us all, so does the reach of traveling professionals in critical industries like healthcare and construction.
See full article here: https://www.newsweek.com/making-sense-corporate-housing-todays-market-1757008