The Housing Market’s Impact on Recruiting Top Talent
October, 2007. It seems like every day there are stories in the news about the housing market and how bad it’s becoming. The newspapers and Internet are replete with statistics about how difficult it is to sell a house and how it’s going to get worse before it gets better.
So what exactly does this mean for companies looking to hire the best and brightest in the market? It means the degree of difficulty is higher than ever before.
Understanding the challenges
Let’s start with the fact that this is a candidates’ market. Even if you were to take the current housing woes out of the equation, candidates are firmly in the driver’s seat. That translates into multiple offers from numerous companies, not to mention counteroffers from their current employer. Under just those circumstances, wooing the candidates you need is no walk in the park. Throw in today’s housing market, and you can understand how building a team of superstars can seem next to impossible.
The first step to addressing the challenges that the housing market presents is to understand what they are. In other words, you should strive to understand what challenges the candidates are facing and how those challenges are affecting the decisions they make regarding job changes and relocation. Below are some of those challenges:
- The candidate lives in an area of the country hit hardest by the housing crunch. People all over the nation are finding it next to impossible to sell their homes right now, and the offers they are receiving are well below what they paid for the house. Many people have had their house on the market for 12 to 18 months, and in some cases even longer, with no end in sight. According to CNN, the top four cities with the highest foreclosure rates are Cleveland, Atlanta, Denver and Detroit. In addition, the top four states with the highest foreclosure rates are California, Florida, Nevada, and Texas. Clearly, this isn’t just a regional or localized phenomenon.
- The candidate has a variable interest loan. According to CNN, over two million homeowners with Adjustable Rate Mortgages (ARMS) will have their mortgage “re-set” between now and the end of the year. As for the remaining 75%? Their mortgages will re-set next year, translating into higher mortgage payments and less financial flexibility. If a candidate has poor credit and is in this situation, they won’t qualify for a new loan. In other words, not only might they be having trouble selling their house, they won’t be able to buy another one, either.
- The candidate has a spouse who is reluctant to sell the house at a loss. Let’s say, for example, that the candidate is willing to sell their house, even at a loss. That doesn’t mean their spouse will feel the same way. And sometimes the candidate isn’t even aware this is the case until they accept an offer of employment. As you might imagine, this can generate uncertainty, stress, and reluctance to ultimately make a move.
Understanding the reactions
So—what’s the end result? Candidates are turning down offers that include substantial pay and benefit increases. To illustrate the point, it’s become almost commonplace for candidates to turn down excellent opportunities to advance their careers, some with significant compensation increases, because they believe they won’t be able to sell their house.
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