2025: Real Estate Market Volatility and Creative Solutions

Heading into 2025, the housing market continues to play a pivotal role in relocation success. Interest rates, inventory shortages, and regional disparities create unique challenges for relocating employees and their employers. These dynamics underscore the need for innovative solutions and flexible strategies, which Relocation Management Companies (RMCs) can often provide.

Market Volatility: A Balancing Act

The housing market remains in flux, with interest rates projected to hover between 6% and 7%. This sustained increase in borrowing costs has led many potential homebuyers to delay purchases, prioritizing rentals or exploring alternative financing options instead. Home sales, though predicted to rise modestly, are still constrained by limited inventory and high prices, with newly constructed homes playing a growing role in meeting demand (U.S. News). RMCs can aid companies in offering relief for employees through home purchase programs, home finding assistance, temporary housing options, and more.

Inventory Challenges

Existing home inventories remain tight, partly due to "lock-in effects," where homeowners with low-interest mortgages hesitate to sell and reenter the market at higher rates. This has prompted homebuilders to step in, with new construction making up an increasing share of available inventory. These homes often come with builder incentives such as rate buydowns and closing cost assistance, offering some relief to buyers (U.S. News). However, for relocating employees, home building is often not a realistic option due to time constraints and length of relocation. In addition, as Bankrate notes, the total cost of ownership—factoring in taxes, insurance, and maintenance—continues to climb, driving many to reconsider renting as a more affordable option, which rings true for transferees as well.

Flexible Housing Solutions for Relocation

In this environment, creative and adaptable relocation solutions are more critical than ever. Programs such as GBO/BVO options, mortgage assistance benefits, and flexible housing allowances can mitigate housing-related challenges for employees on the move (RelocateMagazine). Additionally, suburban housing options and fully furnished accommodations in less central locations are expected to gain traction as cost-effective alternatives.

Suburban Living and Temporary Housing

Suburban areas with greater housing availability offer an appealing option for relocating employees seeking affordability and more space. Fully furnished temporary housing, meanwhile, provides a convenient interim solution, enabling employees to settle quickly while they navigate the complexities of a challenging housing market.

The Role of RMCs in 2025

RMCs are uniquely positioned to help organizations and employees overcome housing market hurdles. By offering robust home sale programs and leveraging partnerships with mortgage lenders and real estate agents, RMCs can provide tailored solutions that address individual and regional market conditions.

As real estate commission structures evolve and listing practices shift due to regulatory changes, the landscape for buyers and sellers is becoming more complex. RMCs and their partners can serve as trusted advisors, guiding employees through these changes while ensuring transparency and efficiency.

Looking Ahead

“We expect 2025 to be somewhat volatile as the new US administration begins to implement their policies,” stated Bert Dodson, Vice President of Domestic Operations at NuCompass. “Recent data confirms that inflation continues to cool, and our economy remains resilient, which has caused most experts to dismiss the possibility of a significant recession. From a real estate perspective, we expect continued progress towards addressing the housing shortage as developers continue to build new apartments and homes to meet the need. If the Federal Reserve continues to cut the federal fund rate this year, we should see interest rates continue to ease as well; though, it may be at a slower pace than we had hoped. If mortgage rates dip below 6%, we also expect homeowners, who have been hesitant to sell, to reenter the market, which would help improve the available inventory.”

In this dynamic environment, the housing market's volatility and evolving trends demand innovative, employee-centered solutions. The next five years promise continued evolution in the housing market, with home prices projected to rise moderately and inventory challenges likely persisting. Employers partnering with forward-thinking RMCs can better navigate these dynamics, ensuring successful relocations while addressing the financial and logistical concerns of their employees.

NuCompass remains committed to empowering organizations with the tools and expertise needed to navigate these challenges effectively. By embracing flexible housing options, fostering collaboration with industry partners, and staying attuned to market trends, we aim to ensure seamless transitions for employees and their families.

About NuCompass

NuCompass Mobility is a veteran-owned, independent mobility management company, offering a comprehensive range of global mobility and U.S. domestic relocation services. For more information about how NuCompass and our CoPilot® or CoPilot Express™ platforms can support your global mobility needs, visit www.nucompass.com/solutions/technology today!