Building Inspection Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 7,600 building inspection service providers in the US evaluate all aspects of building structure and component systems and prepare reports on the physical condition of a property. In addition to inspection services, firms may provide expert witness testimony in court cases. Some building inspectors, especially home inspectors, are self-employed and may work part time.

Liability for Errors

Building inspectors expose themselves to liability related to errors or omissions when performing an inspection.

Dependence on Referrals

Referrals from real estate agents are in important source of business for home inspectors.

Industry size & Structure

The average building inspection services provider operates out of a single location, employs about 3 workers, and generates $592,000 annually.

    • The building inspection services industry consists of about 7,600 firms that employ about 23,400 workers and generate about $4.5 billion annually.
    • The industry is fragmented; the top 50 companies account for about 25% of industry revenue.
    • Large firms may offer a wide range of testing, inspection, and certification services, including building inspection services. National Field Representatives offers property inspection service throughout the US. National Property Inspections is a large franchise operator. Most firms operate regionally.
    • Some building inspectors, especially home inspectors, are self-employed and may work part time.
                              Industry Forecast
                              Building Inspection Services Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              May 20, 2024 - Industry to Return to Steady but Flat Growth
                              • The building inspection services are expected to see weaker sales growth this year, but demand is projected to improve in the following four years. The industry’s year-over-year sales increased by 14.3% in 2022 before dropping to 5.8% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to moderate further to about 2.6% in 2024, then rise to 3.9% in 2025. The industry will then see steady but mostly flat average annual growth of about 4.3% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
                              • The number of building permits issued for single-family, privately-owned housing units, a demand driver for building inspection services, decreased 0.8% month-over-month but rose 11.4% year-over-year in April 2024. Single-family housing starts fell by 0.4% month-over-month but increased 17.7% year-over-year in April. Single-family housing completions were up 15.4% month-over-month and gained 13.6% year-over-year in April. National Association of Home Builders (NAHB) Chairman Carl Harris said, “While the start of the year has seen an expansion for single-family home building because of a lack of existing home inventory, home building activity leveled off in April as higher interest rates, tighter lending conditions and lower home building sentiment acted as headwinds on new home construction.”
                              • The Dodge Momentum Index (DMI) increased 6.1% in April 2024 to 173.9 (2000=100), up from the revised March reading of 164.0. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component improved by 12.6%, but institutional declined by 6.3%. Dodge’s associate director of forecasting, Sarah Martin, said, “The Dodge Momentum Index (DMI) saw positive progress in April, alongside a deluge of data center projects that entered the planning stage. Outsized demand to build Cloud and AI infrastructure is supporting above-average activity in the sector. Most other categories, however, faced slower growth over the month. Across these industries, it’s likely that owners and developers are grappling with uncertainty around interest rates and lending standards, thus delaying their decisions to push projects into the planning queue. If interest rates begin to tick down in the latter half of 2024, more substantive growth in nonresidential planning activity should follow.”
                              • Multifamily developers’ confidence declined in the first quarter of 2024, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) fell three points in Q1 2024 to 47 compared to the first quarter of 2023. The Multifamily Occupancy Index increased by one point to 83 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include a tight lending environment, higher borrowing costs, and difficulties with getting projects approved. A large number of multifamily projects currently underway is expected to dampen starts. The NAHB expects multifamily starts in 2024 to drop by 28% as development activity declines.
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