Slashed budgets, sluggish home sales and tighter federal restrictions have stymied a historically steady real estate business: corporate relocation.

The cost to relocate an employee domestically is between $70,000 and $80,000 – according to industry professionals – and in an effort to cut spending, companies have reexamined the necessity of moving employees cross country.

But there is a simpler, more pressing problem for the industry: in order for the employee to buy a new home in the area, they have to sell their old home first.

“What’s caused us the most angst right now is the sale of the property [across the country] is taking a lot longer than it had been,” said Jim Moran, regional vice president for corporate relocation at Coldwell Banker. “It still requires an outside buyer to come in and purchase [the home] before he can move on, and a softened real estate market across the country has created a real slowdown of the whole process. What had been a 90-day transaction has been pushed out to a 120 or 150 days.”

Before 2008’s financial meltdown – when real estate was an investment with a reasonable rate of return – larger companies would simply buy employees out of their homes.

Now, that option is only exercised for the people at the top of the pay scale.

“Most corporations are limiting that to top executives,” said Maureen McCaffrey, president of corporate services and business development at Jack Conway & Co. Real Estate. “It’s quite expensive for them.”

New Relo Landscape

There were other options to buyouts before the recent economic upheaval. Mortgage companies offered loans for relocating families, so the process could be sped along with minimum disruption to family life.

“Those have gone away,” said Moran. “No mortgage lenders offer that program anymore. It’s a tightening of the mortgage rules, I guess.”

The federal housing agencies, Fannie Mae and Freddie Mac, have been on the forefront of that tightening. Before 2008, the agencies offered mortgage terms based on a spouse’s former income, factoring in 64 percent of their wages from previous jobs into the loan at a new location.

Freddie Mac now will factor only 33 percent of a spouse’s income. Fannie Mae will not factor it at all, essentially cutting the family’s purchasing power in half.

The result has been a sharp increase in relocation rentals – often at the suggestion of the relocating corporation – both at the origination point and the destination, according to McCaffrey.

That policy contributes greatly to decreased profits for relocation units. A rental agent’s fee is much less than fees garnered from selling a home.

“We’re building a big pipeline of people who can’t sell their homes from where they’re coming from,” Moran said. “They turn into a renter instead of a purchaser, which we assist them with, but it isn’t the same.”

Moran said he was hopeful the newly-relocated renters will eventually buy homes, once the market stabilizes in Massachusetts and abroad.

“Again, it’s a new phenomenon,” he said. “Typically, they will buy; they have 12 to 18 months to take advantage of their relocation benefits.”

Moran, citing company policy, refused to quantify the losses for Coldwell Banker’s relocation unit, but did acknowledge the losses exist.

“We softened just like the rest of the real estate company,” he said. “I’m used to having significant increases every year, and it’s new to me.”

McCaffrey said Jack Conway’s unit saw a 35 percent decline in 2008 from their 2007 business, but sales had increased by 20 percent in 2009 through the first two quarters compared to the awful 2008 numbers.

“That seems to be a little bit unusual, but we’re really happy with that,” she said.

Think Global, Act Local

There is another factor hurting the relocation business beyond real estate woes and loan options; Boston’s job market is brimming with unemployed talent, and the local colleges are producing more all the time. Instead of moving an employee across the country, they may promote from within and hire locally.

“In this market, we’re seeing that it works in the employer’s favor that they haven’t seen a talent pool of this scope in a very long time,” McCaffrey said. “They’re weighing all those options.”