Title Abstract and Settlement Offices
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 6,800 title abstract and settlement offices in the US coordinate and conduct activities necessary to transfer ownership of real estate. Firms may charge fees for title searches, surveys, tax certificates, legal services, escrow, filing, recording, documentation, and delivery. Firms also earn commissions as an agent for a title insurance provider.
Dependence On Third Parties
For most real estate transactions, a third party, such as a real estate agent, builder, or mortgage banker, recommends a title company.
Government Regulation
The complexities of real estate transactions and potential for service providers to commit fraudulent or unethical acts have led to government regulations to protect buyers and sellers.
Industry size & Structure
The average title abstract and settlement office operates out of a single location, employs 11 workers, and generates $1.4 million annually.
- The title abstract and settlement industry consists of about 6,800 companies that employ about 76,300 workers and generate about $9.5 billion annually.
- The industry is fragmented; the top 50 firms account for 39% of industry sales.
- The industry includes real estate settlement offices, title abstract companies, and title search companies.
- Some large title insurance companies, such as Fidelity National Financial and Stewart Information Services, are vertically-integrated, and provide titling services in addition to insurance policies.
Industry Forecast
Title Abstract and Settlement Offices Industry Growth
Recent Developments
Jul 23, 2024 - Builder Sentiment Drops
- Home builder confidence in the single-family market dropped in July to the lowest level since December 2023 amid high mortgage rates and elevated builder financing costs, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell one point to 42 in July 2024. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The HMI survey also showed that 31% of builders have reduced home prices to lure potential buyers off the sidelines, although the average price reduction of 6% remained unchanged for the thirteenth consecutive month.
- Amid high interest rates and home prices, many homeowners who locked in a low mortgage rate before rates began rising are finding themselves stuck if they wish to move, according to The Wall Street Journal. About two-thirds of all outstanding US mortgages have a rate lower than 4%, according to Morgan Stanley. To move, homeowners must abandon their low rate and take on a fresh mortgage when current rates are near 7%. As homeowners stay put, adjacent industries, including real estate services, have seen demand drop.
- Applications for new home mortgages declined 16% in June 2024 compared to May but increased 0.7% year-over-year, according to the Mortgage Bankers Association (MBA). The MBA’s Vice President and Deputy Chief Economist Joel Kan said, “Applications for new home purchases slowed in June, consistent with broader declines in single-family construction and new building permits as well as typical seasonal patterns.” Yun added, “MBA’s estimate of new home sales showed a monthly decline to a pace of 626,000 units – the slowest in four months. Mortgage rates dipped below 7 percent in June but that did little to spur purchase activity.”
- Sales of existing US homes decreased by 5.4% in June from May and were down 5.4% year-over-year, according to the National Association of Realtors (NAR). The median home price rose 4.1% in June to $426,900, marking the second consecutive month that median home prices hit all-time highs. NAR chief economist Lawrence Yun said, “We're seeing a slow shift from a seller's market to a buyer's market. Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.” Yun added, “Even as the median home price reached a new record high, further large accelerations are unlikely. Supply and demand dynamics are nearing a balanced market condition. The months supply of inventory reached its highest level in more than four years.”
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