Relocation Industry History
Through the years the relocation industry has been marked by significant events and milestones. In addition, during this time many companies have come and gone. We will chronicle some of the major events, mergers and acquisitions to show how the relocation industry and related services have changed and also have remained much the same.
1950s – International assignments take hold as organizations look for ways to expand beyond borders. Assignees are viewed as pioneers.
1955 – The first relocation company is founded to provide destination services to corporations. Destination services is designed to provide area orientation services to help transferees “settle in” to their new community by showing them where places such as local stores, restaurants and entertainment are located. The service also provides information on local organizations, sporting and cultural venues and opportunities for community involvement.
1955 – Interstate Commerce Commission (ICC) approved the HGCB ratemaking agreement which granted anti-trust immunity – the commissions first unconditional approval of a collective ratemaking agreement. Motor Carriers begin a unique ability to collectively set rates for Interstate Transportation.
Early 1960s – Relocation companies, such as Homequity, Executrans, Transamerica and Merrill Lynch, emerge to serve the need for home purchase assistance programs and to compete with companies who have in-house home purchase programs.
1964 – Worldwide Employee Relocation Council (ERC) is founded.
1965 – Crown Worldwide Group was founded as an international freight forwarding company located in Japan. Many years later, Crown launched global relocation services.
1971 – KC Dat was founded as an international freight forwarding company throughout China and Hong Kong. KC Dat joined the Asian Tiger group, an alliance of freight forwarders in the Far East.
1972 – Revenue Ruling 72-339 affirmed that a corporation could buy the homes of their employees and place the properties on the market for resale through the real estate community without tax consequences to the employee.
1974 – Congress passes the Real Estate Settlement Procedures Act (RESPA) to establish guidelines and regulate settlement costs and procedures in residential real estate.
Mid to late 1970s – Companies that provide solutions to address cost of living differentials, taxation in the home and host countries, destination services, language and cultural training services begin to surface. These value-add products and services are borne to contribute towards more successful international assignments.
Late 1970s – Internally funded loans and mortgage interest differential assistance (MIDA) are introduced by companies to ease the financial burden of relocating employees unable to afford the 16%-18% mortgage interest rates required to obtain a mortgage on their new homes.
1978 – Executrans Relocation is sold to Coldwell Banker.
1980s – Teleconferencing becomes integral in the relocation industry by allowing transferees and their partners to simultaneously speak with a mortgage representative. It also allows transferees to be pre-qualified for homes over the telephone, saving precious time and enabling transferees to get the most out of their househunting trips.
Consolidation of the relocation industry sees many well-known companies exit the relocation arena including Transamerica, ChemExec Relocation, Equitable and GE Relocation (Genesis).
Consulting divisions of relocation companies formalize more integrated global relocation policies that support successful international assignments.
1980 – Deregulation of the household goods industry. After 45 years of rate control, the Motor Carrier Act of 1980 is enacted. The household goods industry begins to witness the beginning of discounting. The practice of discounting becomes “the norm” in the industry along with Contract Carriage Agreements for National Accounts.
1981 – Sears, Roebuck and Co. buys Coldwell Banker Relocation and Real Estate.
1982 – Revenue Ruling 82-204 IRS rules that homes owned by a corporation are considered capital assets.
Mid 1980s – Lower interest rates leads to the decline in the use of MIDA provisions. Domestic policies began eliminating MIDA provisions.
1986 – Tax Reform Act of 1986 passed, requiring the reporting of real estate transactions by the person responsible for the closing.
1987 – Premier Relocation Services and its consulting division, Premier Decision Resources, are formed under The Weyerhaeuser Company.
1989 – Merrill Lynch Real Estate and Relocation is sold to Prudential.
Late 1980s – Early 1990s – Housing prices begin to appreciate, mortgage rates remain steady. Companies begin to add mortgage buydown / subsidy programs to address housing affordability in high cost cities.
1990s – Transition assistance and spousal employment assistance, home marketing support and special mortgage programs are borne providing products and services needed by corporations and their transferees at that time to move from one city to another seamlessly.
1990 – Better Homes and Gardens Relocation and Genesis Relocation are sold to PHH Homequity.
1991 – Premier’s senior management team executes a leveraged buyout from The Weyerhaeuser Company, establishing its consulting division, Premier Decision Resources, as a standalone company, renamed Paragon Decision Resources, Inc.
1992 – Omnibus Budget Reconciliation Act changes the Qualified Moving Expense elements of the tax code, making many employer reimbursements fully taxable to the employee. It does not impact Home Sale ruling 72-339.
Mid 1990s – Preferred lender programs are added to domestic relocation policies offering direct bill to the client for transferees and managed closing costs for clients.
1995 – Unigroup acquired Mayflower Van Lines and expanded internationally the following year.
1996 – Coldwell Banker Relocation buys Western Relocation Management.
1996 – Worldwide ERC reports approximately 30% of companies offer some type of mortgage buydown provision.
1997 – HFS buys Coldwell Banker Relocation and PHH Homequity; combined company is renamed Cendant.
1997 – Amdahl Case claims and wins against the IRS that the homes purchased in a relocation process were never owned by Amdahl. The ruling casts a shadow over 72-339 and the industry begins lobbying the IRS for a final definitive ruling.
May 1998 – European Relocation Association (EuRA) was founded.
Late 1990’s – Early 2000s – Career development becomes a primary driver for international assignments leading to an increase in the use of Short-Term Assignments to control costs while providing employees training opportunities in global markets.
Early 2000s – Interest rates hit a historic 40 year low.
Post 9/11 – The US institutes stricter immigration requirements.
2001 – Unigroup Worldwide UTS was formed to further its expansion internationally.
July 30, 2002 – Sarbanes-Oxley Act signed into law requiring more rigorous financial disclosure standards and limits on executive loans.
2002 – SIRVA is formed by the acquisition of Allied Van Lines, North American Van Lines, Cooperative Resources, ProSource Relocation and other smaller relocation companies.
2003 – Paragon Decision Resources, Inc. changes its name to Paragon Global Resources, Inc. and establishes a number of newly formed independent subsidiaries, including Paragon Relocation Resources, Paragon Financial Resources, Paragon Career Resources, Paragon Real Estate Resources and Paragon GeoMobility Resources.
Mid 2000s – China emerges as one of the top destinations for international assignments.
Mortgage bankers, such as GenEquity Mortgage and Wells Fargo, design relocation-specific mortgage products to the needs of transferring employees.
2004 – SIRVA acquires Executive Relocation.
2005 – ERC lobbies the IRS for clear guidance stating which types of home sale programs will be considered non-taxable to the employee and company, resulting in IRS Revenue Ruling 2005-74.
2005 – Worldwide ERC Transfer Volume & Cost Survey reports an increase in the use of mortgage buydown / subsidy provisions to 37%.
2006 – U.S. house prices peaked in mid-2006.
2006 – Multinational corporations significantly increase the number of international assignments – short and long term assignments. Many corporations consider international assignments as career growth for high potential employees.
2006 – Paragon Global Resources establishes its international headquarters in Dublin, Ireland. Paragon Relocation Resources begins delivering destination services on a global basis.
2007 – The housing bubble in the US burst causing declining home values making it financially difficult for transferees to sell and purchase homes. Combined with the financial meltdown, underwriting and lending practices made it more difficult for transferees to qualify for mortgages on new homes.
2007 – The Surface Transportation Board (STB) terminated the rate agreement of all motor carriers rate bureaus, thereby eliminating the HGCB ratemaking authority and anti-trust immunity. The end of collective ratemaking marks the beginning of new van line pricing structures and the move away from the 400 Tariff.
2008 – The US housing market continues to decline affecting transferees in need of selling their homes in the old location. We started to see the rise of Short Sales in relocation whereby the transferee negotiated with their lender to accept a payoff for less than the mortgage balance in order to sell the property to a buyer.
2008 – Government regulations change no longer allowing mortgage subsidies to be included in qualifying factors for the loan.
2008 – Localization packages begin to surge in popularity as organizations seek further cost containment.
2008 – A Canadian company, Brookfield Residential (formerly Royal LePage), acquired GMAC.
2009 – Repatriation volume increases as companies are faced with downsizing their workforce and reducing expenses in light of the global recession.
2009 – US domestic relocation volume declines in response to the global economic crisis. The recession continues to affect the business sector including the relocation industry. Relocation companies begin to adapt to the New Normal.
2009 – Brookfield re-branded GMAC as Brookfield Global Relocation Services.
2010 – RESPA Changes: For the first time in more than 30 years, the U.S. Department of Housing and Urban Development issued mortgage reform. HUD will require that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. HUD estimates its new regulation will save consumers nearly $700 at the closing table.
2010 – Cartus acquires Primacy.
2011 – Brookfield acquires Prudential Real Estate and Relocation Services.