Real Estate Appraisal in the US
Real estate appraisers provide valuation services, like residential property appraisals, commercial property appraisals and real estate portfolio valuations, to those active in real estate markets. The industry primarily depends on the residential and nonresidential markets, contributing to more tha...
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| Format: | Market Research |
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| Language: | eng |
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| Online Access: | Request full text |
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| Summary: | Real estate appraisers provide valuation services, like residential property appraisals, commercial property appraisals and real estate portfolio valuations, to those active in real estate markets. The industry primarily depends on the residential and nonresidential markets, contributing to more than 75.0% of revenue. COVID-19's low interest rates and increased disposable income initially boosted demand for residential appraisals for purchases and refinances. However, the rise of remote work led to decreased demand for office space appraisals. Moreover, as the Federal Reserve began to raise interest rates in 2022, demand for residential appraisals has sunk, pulling down industry revenue. Nonetheless, because of robust revenue growth in 2020 and 2021, industry revenue has expanded at a CAGR of 2.8% to an estimated $11.9 billion over the five years to 2024, including a projected 5.3% increase in 2024 alone.
Interest rate increases drastically raise the cost of investing in real estate, discouraging activity in the residential and commercial markets. As downstream markets have experienced turbulence, profit has fallen over the past five years. Similarly, regulatory troubles have restricted appraisers' prospects by exempting more properties from appraisal requirements and discouraging new companies and appraisers from entering the industry.
The Federal Reserve shared its intentions to cut interest rates beginning in 2024. This will likely result in a rebound within the residential and commercial markets. Lower interest rates typically fuel the housing market by making mortgages more affordable. This leads to a rise in home purchases and refinances, increasing the demand for appraisals. The continued adoption of Automated Valuation Models, hybrid appraisals, and proptech platforms will likely improve efficiency and reduce costs. Over the five years to 2029, industry revenue is expected to rise at a CAGR of 0.8% to $12.4 billion. |
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