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
Recent Developments
Sep 19, 2024 - Federal Reserve Cuts Interest Rates
- At its meeting in September, the Federal Reserve voted to reduce interest rates by half a percentage point, which would put the benchmark federal funds rate between 4.75% and 5%, according to The Wall Street Journal. Projections of fed officials’ moves suggest another four quarter-point cuts will come next year, which would bring the federal funds rate down to 3.5% by the end of 2025. However, it’s unclear to what extent September’s cut will affect housing demand. Mortgage applications were flat year-over-year in September. Meanwhile, for the week ending September 12, the average fixed-rate 30-year mortgage rate was 6.2%, down from 7.18% a year earlier, according to Freddie Mac. Even as mortgage rates have dropped, high home prices and other costs, including homeowner insurance, continue to weigh on affordability.
- Sales of existing US homes decreased by 2.5% in August from July and were down 4.2% year-over-year, according to the National Association of Realtors (NAR). Median existing home prices moderated from July’s all-time high, but August’s median home price rose 3.1% to $416,700 compared to August 2023. NAR chief economist Lawrence Yun said, “Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months.”
- High interest rates have increased the costs for new multifamily construction and reduced property values, prompting some developers to halt or delay projects, according to The Wall Street Journal. Multifamily housing starts involving five or more units fell 21.8% in July compared to July 2023 and were down 41% from their April 2022 peak. The drop in starts follows a boom in apartment building that began during the pandemic. This year, about 610,000 apartment units are expected to come online, the most in any year since the 1980s, according to data firm CoStar. However, as financing new projects has become costlier, CoStar expects new apartment supplies to slip to fewer than 350,000 units in 2025 and 275,000 in 2026. The influx of new apartment building has created an oversupply in some regions, leading to lower property values and weak rent growth, which has reduced developer and investor appetite for new projects.
- The number of building permits issued for single-family, privately-owned housing units, a demand driver for building inspection services, increased 2.8% month-over-month but declined 0.5% year-over-year in August 2024. Single-family housing starts grew by 15.8% month-over-month and increased 5.2% year-over-year in August. Single-family housing completions dropped 5.6% month-over-month but grew 8.4% year-over-year in August. The August rise in housing starts was helped by moderating interest rates, but builders still face supply-side headwinds, including labor and lot shortages and stubbornly high prices for some types of building materials, according to the National Association of Home Builders (NAHB).
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