It’s a win-win situation. When employers help employees become homeowners–even in small ways–workers may feel even more loyal to them. And employees who own their homes are far less likely to relocate and change jobs.
The reasons aren’t hard to figure out. Homeownership can be a major contributor to employees’ overall financial well-being, security, and stability, all of which can add to their productivity and satisfaction on the job. Employer-sponsored homeownership benefits also help build strong communities, and strong communities are almost always good for business.
The need for employer help may be greater now than ever. In recent years, skyrocketing home prices and stagnant wages have meant that it has been harder for employees, particularly workers under age 35, to afford to buy their own homes.
Of the 552 counties analyzed by ATTOM Data Solutions in the first quarter of 2021, 265–48 percent–had median home prices that were less affordable than in earlier periods. What’s more, considering that the national median for home prices also rose 18 percent in the first quarter, these numbers might have been even more dramatic if low mortgage rates had not offset them.
COVID-19 has added to the problem. Homebuyers fleeing crowded urban areas have helped overheat home sales in suburban and rural areas. That has driven prices up even further and locked out would-be buyers, especially those who have been hit financially by the pandemic.
This widespread lack of affordable housing in many areas can make it difficult for employers to attract and retain the best hires. According to data from Gallup, even before the pandemic, U.S. businesses were losing a trillion dollars every year to voluntary turnover. And the cost of replacing an individual employee can range from half of to two times the employee’s salary.
The ultimate result? A huge challenge for HR professionals.
Offering home buying benefits can help. Several companies, understanding the link between homeownership and retention, have introduced homeownership benefits to help build a loyal, productive workforce that can further advance their business objectives.
Homeownership close to work reduces commuting time and boosts worker productivity and satisfaction, and some companies have begun to encourage their workers to buy homes near their jobs. Before the pandemic, Facebook, for example, offered cash incentives to employees buying or renting homes close to its headquarters in Menlo Park, Calif. In Indiana, the tomato processor, Red Gold, pays five percent of individual down payments (up to $10,000) for employees who live near the company’s facilities. And until 2019, Yale University gave permanent university employees access to programs that offer up to $30,000 over several years for a home in certain areas of New Haven in order to strengthen communities near campus.
Other companies are trying to help on a more macro level. Tech giants Microsoft, Facebook and Genentech, Amazon, and Salesforce have pledged large amounts of money toward the development of low-income housing in the Seattle and Bay areas, as well as other locations.
Below are some of the ways employers can help their workforce become satisfied homeowners. After studying your workforce demographics and your budget, you may find inspiration among the various approaches below.
Homebuyer Education and Counseling
Knowledge is one of the most cost-effective benefits there is. Consider pairing up with area mortgage experts, financial counselors, and others to produce on-site or virtual information seminars on various homebuying topics. Banks, mortgage brokers, and real estate brokers in your area may be willing to offer free information sessions at your organization in hopes of generating clients. Or you may find one of the many homebuyer consultants available to help educate your workforce.
These programs can provide interested employees with the basics on the local market, different types of mortgages and their rates, mortgage insurance, down payment assistance, legal issues related to homeownership , foreclosure prevention, and much more. And an informed employee can avoid the financially costly mistakes that can so often be part of real estate purchases.
A good credit score is key to qualifying for a mortgage with favorable rates. Employer-sponsored credit counseling can help employees learn how to check their credit scores and, if necessary, take steps to improve them. Consider partnering with a respected credit counseling firm to conduct in-house or virtual workshops or allowing employees time off to attend approved credit counseling seminars outside the workplace.
Down Payment Assistance Programs
With home prices as high as they are in many markets throughout the U.S., saving up a down payment of 10 percent to 20 percent or more can be a barrier to homeownership for many workers.
Employers can help in two ways. They can offer direct financial assistance the way Red Gold does. This usually entails paying a percentage of an employee’s down payment with a dollar amount maximum.
Employers can also help employees access government-sponsored grants and low-interest loans designed to help first-time homebuyers cover down payments and/or closing costs. Your state’s housing finance agency and your local housing authority likely have first-time homebuyer programs. Many offer qualifying buyers grants that don’t have to be paid back. Others have low or no-interest loans that often don’t have to be paid back until the house is sold or refinanced. As a rule, these programs aren’t broadly advertised, so employers who help workers find and apply for such assistance can play an important role in securing these funds.
Help Finding and Paying Real Estate Professionals
Consider partnering with a local bank or mortgage broker to help employees find home financing. In return for the potential mortgage clients, you may be able to negotiate lower closing costs and fees for your employees that your firm also might or might not help subsidize.
A partnership between your firm and local realtors can provide workers with special help in the house-hunting process. And a relationship with local real estate lawyers or access to your own firm’s legal expertise can help lower legal fees associated with home buying for your employees.
Professional relocation services can help with home buying when an employee moves from one area of the country to another. However, with telecommuting on the rise, this is increasingly less common.
There are lots of small but important and cost-effective gestures employers can make when employees are finishing up with the home buying experience. Extra days off (with pay) for closing and moving, for instance, can reduce stress and produce goodwill.
When the deal is done, it’s a nice gesture to acknowledge the new homeowner with a card or housewarming gift. Be sure to remind your employees that you or your expert partners can help answer any follow-up questions that come with homeownership.
You’ll also want to make sure that learning to manage mortgage payments and home ownership is part of your employees’ overall financial well-being picture. Your wellness programs may be able to help with budgeting for home improvements, maintenance, insurance, and other costs your employees may not have anticipated with home ownership.
Employers can’t be the only resource employees turn to when it comes to buying a home. But a company that has a workforce full of employees of home buying age may find that it can fill an important need and, in the process, help keep its workforce steady, loyal, productive, and satisfied.
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