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 7,100 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 $563,000 annually.
- The building inspection services industry consists of about 7,100 firms that employ about 23,400 workers and generate about $4 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
May 19, 2023 - Buyers Look to New Homes Amid Tight Existing Home Market
- A recent drop in mortgage interest rates and a shortage of existing homes for sale has boosted demand for newly built homes, according to The Wall Street Journal. In late 2022, many potential home buyers paused their plans when average mortgage rates topped 7%. As of May 18, the weekly average 30-year mortgage rate was 6.39%, according to Freddie Mac. The number of active listings for existing homes in March was about half of what they were four years earlier, according to Realtor.com. Sales of new homes accounted for about one-third of single-family home sales in March, according to Commerce Department and National Association of Realtors data. Historically, newly-built homes hold about 10% to 20% of the single-family market.
- North American construction spending is set to decline by 1% in 2023 compared to 11% growth in 2022, according to FMI’s second-quarter 2023 North American Engineering and Construction Outlook. Higher interest rates and a potential recession are forecast to reduce single-family residential construction spending to 0% growth or lower in 2023. The single-family market is projected to remain weak through 2026. However, several nonresidential building segments are projected to see spending growth of 10% or more in 2023, including lodging, commercial, and manufacturing. Other segments will experience spending growth of 5% or more, including multifamily, office, healthcare, and amusement and recreation. Spending growth will be between flat and 4% for education, religious, and public safety.
- Improving housing affordability is keeping prospective buyers more engaged, according to the National Association of Home Builders (NAHB). More prospective buyers are moving beyond the planning phase of their home search. In the first quarter of 2023, 56% of prospective homebuyers said they were actively involved in the purchasing process, compared to 46% in Q4 2022. While improving affordability conditions have increased buyer engagement, they are also making the housing market more competitive. In Q1 2023, 71% of buyers reported spending three months or more on their home search, compared to 65% in Q4 2022.
- Some real estate industry insiders expect jitters in the regional banking industry to exacerbate a slowdown in multifamily starts brought on by rising interest rates and high construction costs, according to Bisnow. In the first quarter of 2023, residential construction starts declined by 29% compared to the same period in 2022, according to Dodge Data & Analytics. The failures of Silicon Valley Bank and Signature Bank, and later the seizure and sale of First Republic Bank, have chilled lending. Private developers often rely on regional banks for financing projects, and some industry experts expect tighter lending standards to slow multifamily housing starts.
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