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 9 workers, and generates $1.4 million annually.
- The title abstract and settlement industry consists of about 6,800 companies that employ about 62,500 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
Nov 22, 2022 - Rising Interest Rates, Inflation Reduce Housing Affordability
- US housing affordability fell to its lowest point since the Great Recession in the third quarter of 2022 amid rising mortgage rates, inflation, low housing inventory, and high home prices, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI). Only 42.2% of new and existing homes sold between July 2022 and the end of September were affordable for households with a median income of $90,000. The third quarter of 2022 marked the second consecutive quarterly record low for housing affordability in more than 10 years. According to the HOI, the median home price in Q3 2022 was $380,000, down from the all-time high of $390,000 set in Q2 2022.
- Building permits, housing starts, and housing completions are indicators of future title services demand. The number of building permits issued for privately-owned housing units decreased 2.4% month over month and declined 10.1 year over year in October 2022. Housing starts fell 4.2% month over month and decreased 8.8% year over year in October. Housing completions fell 6.4% month over month but rose 6.6% year over year in October.
- High interest rates, elevated building materials prices, and a lack of affordable inventory pushed home builder sentiment lower in November, according to the National Association of Home Builders (NAHB). Homebuilder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell five points to 33 in November 2022 from 38 in October, marking the 11th consecutive monthly decline. Any HMI reading over 50 indicates more builders see conditions as good than poor. Amid weak buyer traffic, 37% of homebuilders reported cutting prices in November compared to 26% who reduced prices in September, according to the NAHB.
- US mortgage applications for new home purchases fell 28.6% in October compared to a year earlier, according to the Mortgage Bankers Association (MBA). New home mortgage applications were down 13% from September. The 30-year conforming rate for mortgages hit 6.81, marking the highest rate since 2006. The MBA’s Chief Economist said, “New home purchase activity weakened on a monthly and annualized basis in October, as the sharp jump in mortgage rates to nearly 7% reduced both overall demand and the purchasing power for many prospective buyers.”
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