Demand for appraisals is increasing as the real estate market recovers from the subprime crisis
Los Angeles, CA (PRWEB) March 19, 2013
Real estate appraisers estimate the fair market value of real estate property when it is bought, sold, mortgaged, developed, improved, insured, disputed or taxed. About 58.0% of industry revenue is generated from servicing the financial sector; the balance comes from servicing law offices, private owners and buyers and, to a lesser extent, government and accounting clients. Over the five years to 2013, Real Estate Appraisal industry revenue is expected to increase at an annualized rate of 2.1% to $6.6 billion. “From 2008 to 2010, the subprime crisis and ensuing recession resulted in a dramatic decline in property values, transaction volumes and development activity across the residential and nonresidential real estate markets in the United States, causing demand for appraisal services to dwindle,” says IBISWorld industry analyst Eben Jose. Over the past two years, however, IBISWorld expects that industry revenue has recovered substantially, and estimates it will grow 6.7% in 2013 as the volume of real estate transactions increases and property values continue to recover from recessionary lows.
Although the industry now employs an estimated 86,997 people compared to 82,154 in 2008, at the beginning of the subprime crisis, many operators shed employees early in the five-year period. Workforce reductions were just one strategy industry operators used to cut costs and maintain profit margins over the past five years. Other cost-cutting initiatives included reducing commissions, disposition of unprofitable assets and a slowdown in merger and acquisition activity. These measures and improved economic conditions are expected to lead to a widening of profit margins, which fell from about 16.0% in 2008 to 13.5% in 2013. Despite an anticipated increase in margins over the current year, industry profit fell for three of the past five years. In the five years to 2018, IBISWorld projects that the Real Estate Appraisal industry will grow. Industry performance will be supported by recovery in the downstream real estate markets and increases in development and investment activities. Although industry revenue is expected to rise, profit growth will likely be hindered by the use of centralized property databases (computing programs that can do the job of an appraiser) and the growing popularity of appraisal management firms (which often require appraisers to work for lower fees). The Real Estate Appraisal industry in the United States has a low concentration of ownership.
The top five firms in the Real Estate Appraisal industry account for less than 15.0% of industry revenue with the largest having a market share of just 6.2%. The larger participants in the industry are generally subdivisions of large multinational property, brokerage, and global real estate service firms. The vast majority of companies operating in the industry are small, independent firms with few employees or single-owner operators. According to the US Census and IBISWorld estimates, 75.3% of establishments are nonemployers. From 2008 to 2010, the total number of establishments in the industry was decreasing. The number of nonemployer establishments was decreasing at a faster rate than employer firms. This trend, however, has reversed recently. According to Jose, the total number of enterprises began increasing in 2010, and the number of nonemployer firms is projected to grow at a faster rate than employer firms over the next five years. This shift will likely result from mergers and acquisitions as well as a trend of appraisal professionals leaving firms to become independent contractors as demand for their services is increasingly filtered through appraisal management companies. For more information, visit IBISWorld’s Real Estate Appraisal in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry specialize in estimating the fair market value of real estate. Appraisers research a property or development to determine the characteristics pertinent to its market value. Valuations for a property are carried out when it is sold, mortgaged, taxed, insured or developed.
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.