If you've decided to sit tight and wait out the housing downturn, you're evidently not alone.
At least that's the conclusion one might draw from news that Allied Van Lines and its parent company, Sirva Inc., filed for bankruptcy Tuesday, citing a decline in its moving services and corporate relocation business.
In fact, the biggest hit came in the latter, where Sirva once took a one-stop-shopping approach to relocating employees through services that help them buy, move, and sell their houses with minimal hassle. Part of the deals it struck with its 12,000 corporate and government clients included a "risk abatement" agreement in which Sirva promised to purchase any houses it couldn't sell on the relocators' behalf within a certain period of time.
For a while, the new business model—Sirva's website calls it "Relocation Redefined"—worked well enough. The brainchild of Jim Rogers, a partner at private-equity firm Clayton, Dubilier & Rice, Sirva signed up big-name clients like Dell and Chevron. Rogers then helped take the company public in 2003 at $18.50 a share. But a series of accounting problems and earnings shortfalls the next year sent the stock plummeting after Clayton had roughly tripled the return on its initial investment, thankfully for Rogers.
Sirva's final undoing came as the housing market turned downward and it was forced to buy thousands of houses back from its clients' employees (for their appraised value). Unable to unload many of them, the company now owns more than 1,200 homes, at a cost of about $3 million a month just to maintain them.
All that's not to say that the slowing van lines business didn't play a role in Sirva's demise. Much like the overall trucking industry suffers as the economy slows, the market's van lines segment is down 6.3 percent year over year, according to the latest data from the American Moving and Storage Association. "We have definitely seen this economic downturn reflected in our business," says AMSA spokesman John Bisney, "both because of the weak economy and because of the standstill in new-home construction."
The takeaway: In increasingly uncertain economic times, more and more people are deciding to put off any moves and staying put.
