Industry demand will recover in line with increasing housing starts and home sales.
Los Angeles, CA (PRWEB) August 30, 2012
The Home Inspection Franchises industry provides consumers and other real estate investors with general home inspection services, new construction inspections and specialty inspections. Over the past five years, the industry has suffered under the collapse of the real estate market. IBISWorld industry analyst Lauren Setar says the industry performed extremely well prior to the recession, with the booming housing market providing the industry with steady revenue growth. Unfortunately, when the housing bubble burst, existing home sales and housing starts dropped, negatively impacting the industry. Over the past five years, tightened lending standards and rising unemployment made it difficult for consumers to afford homes.
Additionally, home inspection franchises provide services on residential real estate under construction. The value of residential construction and the number of housing starts have fallen significantly over the past five years. Home inspectors ensure that all new homes meet regulations; however, since there were fewer residential buildings needing inspection, industry demand suffered, says Setar. Luckily for industry operators, conditions are improving. As such, in the five years to 2012, IBISWorld estimates that industry revenue will decline at an average annual rate of 4.7% to $174.7 million, including an increase of 1.1% in 2012. Like revenue, profit margins have also fallen over the past five years. Many players exited the Home Inspection Franchises industry over the past five years due to depressed demand. Although many larger franchises weathered the downturn by slowing wages and cutting employee headcounts, smaller franchises found it difficult to cut costs and retain business. Consequently, in the five years to 2012, IBISWorld estimates that the number of industry enterprises has fallen at an annualized rate of 0.3% to 59 firms.
The Home Inspection Franchises industry displays a high market share concentration. The top four firms are HouseMaster Home Inspections, The ServiceMaster Company, FirstService Corporation and National Property Inspections Inc. However, of those four companies, not one dominates the industry. All four have franchise models that vary slightly in regard to royalty fees, startup costs, training and marketing support, which makes them each suitable to certain potential franchisees. As a result, it is unlikely that any one company will ever dominate the industry in the near future. Over the past five years, industry concentration has increased as the number of enterprises declined due to the recession. Nevertheless, the return of a healthy housing market and increasing awareness of building codes and environmental hazards will certainly drive demand for home inspections in the five years to 2017. As a result, the number of parent companies is estimated to increase over this period, and the number of franchisees is forecast to grow. An increase in the value and volume of residential property transactions will bolster growth and demand for industry services. In the five years to 2017, IBISWorld estimates that industry revenue will increase. However, this growth is primarily a recovery, and the number of existing home sales and housing starts are not expected to reach prerecession highs in the next five years. Profit will also increase with a larger number of specialized services due to consumer awareness of environmental and health matters. For more information, visit IBISWorld’s Home Inspection Franchises in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry operates franchises that provide home inspection services and does not include commercial inspection services. Franchisees receive branding, marketing, training and other services in exchange for franchise, royalty and renewal fees to the franchisor.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.