Employers offer housing benefits as prices hit new highs

By Stephanie Armour
USA Today

Soaring housing costs mean more workers are unable to afford homes in the areas where they work, a problem that has major repercussions for employers trying to recruit and retain workers in hot housing markets. So more employers are offering housing benefits such as grants and loans — in some cases, even building homes their employees can afford.

For Megan Banach, a housing benefit offered by her employer meant she could stop living with her parents and get a place of her own.

About three months ago, the registered nurse bought a two-bedroom condo a block from her employer, Northwest Community Hospital in Arlington Heights, Ill. She bought it through a program the hospital runs. It allows full-time employees who earn less than $70,000 a year to get $5,000 toward a down payment on a first home.

Employees must stay at the hospital five years or they have to repay all or part of the money. Homes must be within 10 miles of work.

"It's nice to know they're helping me out," says Banach, 23. "I can walk to work when I'm on call."

The perk is catching on as low interest rates push housing prices to new highs. In 2003, prices of existing homes appreciated at a rate of 7.5 percent, the largest increase in more than a decade, according to the National Association of Realtors.

That means workers are putting up with longer commutes, quitting jobs to work closer to communities they can afford and refusing to move to cities where homeownership may be out of reach.

Some occupations that are especially hard hit: teachers, police officers, firefighters, janitors, retail salespeople and nurses.

"Teachers live with parents, roommates," says Jason Blum, 38, an elementary school teacher in San Francisco who has been trying to buy a home. "At my school, the longest commute is an hour away."

Entire communities feel the pinch. The dearth of affordable housing inhibits economic growth, because access to labor is a top factor in business development. Areas also suffer when employees vital to a community, such as firefighters, police and teachers, can't afford to live there.

"The term 'affordable housing' had traditionally been associated with low-income housing," says Cassandra Matthews, an associate legislative director for the National Association of Counties, which represents county governments. "But we're seeing that it's a middle-class problem."

Some employers have responded by relaxing rules that require workers to live close by. In Lake Forest, Ill., for example, police once had to live within 10 miles of work. As housing costs climbed, that requirement changed: Today, it's 25 miles.

Other employers spend cash to offer a mix of housing benefits, a growing perk even amid the tepid job market and cost-cutting business climate.

Twenty percent of employers helped workers with mortgages or down payments in 2004, up from 9 percent in 2000. And 19 percent offered rental assistance, up from 5 percent in 2002, according to the Society for Human Resource Management.

A host of companies, including Hewlett-Packard, Cisco Systems, Intel and Mayo Clinic in Rochester, Minn., are getting involved.

Before 2000, Fannie Mae provided 10 to 15 employers a year of free guidance to set up housing assistance. In 2000, they set a goal to help 1,000 employers in 10 years. From 2000 to today, the mortgage investor has assisted almost 500. The number of employers helped in 2004 has outpaced any other year.

Though such benefits aren't cheap for many employers, the cost of turnover without such a program can be even more painful.

Some employers are buying homes and renovating them for workers or creating their own housing, a throwback to turn-of-the-century company towns.

In San Diego, where the median home price in 2003 was $407,000, a school board proposal would develop affordable housing for teachers and other residents.

In Cincinnati, Jancoa Janitorial Services launched an independent organization to help employees reach dreams such as homeownership. They've purchased a home for $34,000 and are renovating it before reselling it to a worker.

Soraya Ardon, 27, of Cincinnati bought a home two years ago through the program. The mother of two is human resources manager for Jancoa; the guidance was key, she says, to understanding the process and moving out of her mother's house to her own.