Real Estate Appraisers

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 12,600 real estate appraisers in the US estimate the fair market value of land and buildings, typically before properties are sold, mortgaged, taxed, insured, or developed. Large firms may offer related services, such as information or closing services. Independent appraisers may serve as expert witnesses.

Vulnerability to Trends in Housing Market

A key driver of financial performance in the real estate appraisal industry is the US housing market, which is sensitive to changes in economic conditions.

Competition from Alternative Valuation Models

Alternative valuation models (AVM), which are computerized models used by mortgage originators and secondary market issuers to determine property value, pose a significant threat to real estate appraisers.

Industry size & Structure

The average real estate appraiser employs 2-3 workers and generates less than $500,000 annually.

    • The real estate appraisal industry consists of about 12,600 firms that employ 31,800 workers and generate $6.5 billion annually.
    • The industry is fragmented; the top 50 companies account for 40% of industry revenue.
    • About 39% of establishments generate between $100,000 and $249,999 annually; 23% generate less than $100,000 annually; and 20% generate between $250,000 and $499,999 annually.
    • Large appraisal management companies (AMC) include CoreLogic, Solidifi, and TSI Appraisal.
    • Nearly 42% of appraisers are employees within a firm and 46% are sole proprietors without employees, according to the Appraisal Institute.
                          Industry Forecast
                          Real Estate Appraisers Industry Growth
                          Source: Vertical IQ and Inforum

                          Recent Developments

                          Nov 21, 2022 - Existing Home Sales Drop
                          • Sales of existing US homes fell 5.9% in October from September and were down 28.4% year over year, according to the National Association of Realtors (NAR). October marked the ninth consecutive monthly drop as rising interest rates slow home sales. NAR chief economist Lawrence Yun said, "More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher. The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years."
                          • Some homebuilders are bracing for an even more challenging housing market in 2023, according to CNBC. While rising interest rates have kept many would-be first-time home buyers on the sidelines, some industry insiders suggest affluent buyers may also be hesitating due to diminished confidence in the economy. NAHB Chief Economist Robert Dietz has said 2022 will be the first year since 2011 to see a year-over-year decline in housing starts. In a recent press release, Dietz said,” While some analysts have suggested that the housing market is now more ‘balanced,’ the truth is that the homeownership rate will decline in the quarters ahead as higher interest rates and ongoing elevated construction costs continue to price out a large number of prospective buyers.”
                          • The long-term impact of the pandemic on office demand is becoming clearer, according to reporting by Biznow. The number of new office leases in the third quarter of 2022 was down 18% compared to Q3 2021 and was off 15% from Q3 2019, according to commercial real estate data firm CoStar. The square footage of office leases is also dropping. In the first three quarters of 2019, the average office lease was about 4,500 square feet. In the first nine months of 2022, the average lease fell to 3,800 square feet, according to CoStar. In Q3 2022, the average office lease term fell to 6.2 years after rising for the previous 12 months to 9.1 years, according to real estate firm JLL’s Q3 Office Outlook report.
                          • Some real estate developers are holding off on new office projects as remote work has eroded demand for new office space, and rising interest rates make projects more expensive, according to The Wall Street Journal. Office occupancy is only about half of what it was before the pandemic, which has prompted some major real estate firms, including Varnado Realty Trust; Hines, Kilroy Realty Corp.; and Brookfield Asset Management, to tap the breaks on new office development projects. The national office vacancy rate is 12.5%, up from 9.6% in 2019, according to commercial real estate data firm CoStar Group. About 37% of the office space currently under development remains available, double what it was in 2019, according to CoStar.
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