WHAT IS THE OUTLOOK FOR THE HOME INSPECTION MARKET? WILL THINGS PICK UP OR SLOW DOWN? LISTEN IN TO OUR QUARTERLY REPORT!
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PODCAST TRANSCRIPT:
Ian R: Welcome back to inspector toolbelt talk the home of the world’s most bestest Home Inspection Software and also home to me and Beon. Hey Beon.
Beon DeNood: The home of the most bestest.
Ian R: I’m sorry, mostest bestest.
Beon DeNood: Well, I can’t deny the facts there. Yeah, welcome back to the show. Good to be back.
Ian R: Yeah. So how did you fare with Hurricane Ian? Was it okay for you guys?
Beon DeNood: Yeah. You know, Ian was a real jerk. Yeah, but we all know that. You know, jokes aside, it was for us. We’re in Northeast Florida and it really gave us you know, some wins in quite a bit of rain. We made it through okay, no problem. For the folks in the western part of the state. Definitely. Matt was was much, much worse, even just a little south of us. Looks like there were a couple of tornadoes in some folks with a lot of flooding. So they’re still cleaning up, but some are gonna have months and in years, and others have lost things that they’ll and people will never be able to recover. So yeah, we can’t complain. We may not really be well, but for other folks, man, what a tough storm.
Ian R: Yeah. That was your family’s first major hurricane there in Florida. Right?
Beon DeNood: Yeah. So we’re new Floridians, they’ve only been here for just over a year. A first hurricane experience. You know, it’s funny, I come from the northeast, you got a big snowstorm coming in, you know, let’s say that the forecast is in the feet. You know, you get everything tied up and hunker down, you know, you get prepared for the storm but then the storm starts and it’s quiet, you know, sleep really well and you wake up the next morning, everything’s extra quiet. See the plow trucks going by and it’s peaceful, you know, man oh, man, this hurricane business you can’t sleep you know, the winds howling the trees are shaking around. It’s quite an experience.
Ian R: One inspector said paradise for the price. You know.
Beon DeNood: Know, for sure. That’s why when we moved here, we were very deliberate about where we chose our home, you know, distance from the coast. floodplains, you know, looked at all of that. Even in our area, I can see how we made a lot better than some other folks. So, yeah, it really pays to try and do your research. I mean, not all of us get to choose exactly where we want to live. But you know, we were able to make some choices and it looks like it helps out.
Ian R: Yeah, my in-laws in Okeechobee, Florida. They live on the north side of the lake. They lost power for a couple of days. It wasn’t too too bad for them but man, I feel bad for those people up in Fort Myers. I was watching. There’s a friend of mine, who works for the National wetland service and stuff like that. So whenever there’s a natural disaster, he’s part of it or whatever forest trees I don’t know what he’s what he does. I know when there’s a natural disaster, he’s kind of showing up and helping him with things. He showed me a video of the beaches at Fort Myers just getting ripped away. You know, it was amazing to watch. I really feel bad for people down there. On a lighter note. I don’t think I had ever gotten in touch with more people that I have known throughout my life than when there was a hurricane Ian, anyone I ever met, sent me a message making some sort of hurricane Ian joke. My favorite to date was “Hurricane Ian just like the real Ian and shows up unexpectedly leaves a mess and makes a bunch of noise.” Like okay, well. That’s about right.
Beon DeNood: Yeah, yeah. though. I think, you know, it was still in the Caribbean and I was like, Hey, man, stay away from Florida. Well, yeah, yeah. Really? What? What, what are you talking about?
Ian R: I didn’t even know about it, then I’m like, come on. Now. It’ll never end.
Beon DeNood: Yeah, yeah. No, but yeah, to all the folks who are reeling in the aftermath all the best with the recovery. You know, obviously, it’s home inspectors. I was thinking a lot about this trade and how important it is, you know, I mean, Florida, you think of the four points in the wind minutes. Really all those the standards and construction. Can you see the older homes do not fare well as all the newer homes, they’re up to the newer standards, you know, is that you guys inspect and make sure you’re being followed correctly? It really saves lives saves property, and it’s important to get right.
Ian R: Yeah, and even after the storm, there’s a whole lot of stuff that’s going to happen now the home inspectors are going to need to be involved in we have an important industry all across the US and Canada. After a storm or before a storm like this. Very important. Anyways, getting into our subject here actually, I have one more thing to tell you something funny happened yesterday and we’re always beginning the podcast. We’re always all over the place but I called a guy yesterday and I’m like, Hey, how are you doing? This is Ian. He goes, This is so weird. I’m like, okay, and he goes, I was just listening to your podcast, and I turned down your podcast and answer my Phone, and I have the same voice. He goes, that just messed up my brain.
Beon DeNood: We’re taking live callers now.
Ian R: I think he was listening to our last podcast on the market outlook for the middle of the year. So every quarter, we’ve been doing these market outlooks, because first of all, we’ve been kind of on the nose about things. I mean, I guess it’s really not that hard when you see these big market swings, but we’ve been pretty on the nose about it. It kind of helps us to get prepared as we look at what’s happening now and what’s coming down the road. Man, I tell you, there’s some more stuff coming up. Some good, some bad, but I think I don’t think we’re over with the ride just yet. So I think this is a very timely podcast, the Q3 home inspection market outlook.
Beon DeNood: Yeah, I always enjoyed these episodes, I have a confession, though. I am not super well-researched going into this. So I want to hear what you have to say. Obviously, I’ve been keeping up with the news like most of the guys listening. I like to see what you think about where we go in here.
Ian R: So I actually have done quite a bit of research. It started a few weeks ago with an article that realtor.com came out with. Actually talked about a boom in home inspections. It was very subjective, they really had no data on it, it was just, oh, hey, because it’s a buyers’ market, there’s going to be more home inspections. What they got wrong about it, is that while we are transitioning into a buyers’ market, it’s still not a buyers’ market. The hardest part of any market shift is the actual shift when we’re going into that market. So it’s not quite where we may want it to be.
Beon DeNood: Yeah, you know, as you said, buyer’s market. I was like, Hey, wait for a second, you know, interest rates are super duper high, and house prices, they went on this huge surge up. They haven’t really come down in some parts of the country they actually still holding and still going up. So yeah, I agree with you based on just, you know, those couple of things. It’s definitely not a buyers’ market quite yet.
Ian R: Yeah, you know, there was an article that Dave Ramsey’s company over there, came out with, I think it was a little bit more realistic. It talked about some of the market shifts that are happening. One of the market shifts is just what you mentioned, their interest rates are still high and are going up but let’s be frank if we’ve been around if we’re older than 30 years old, the interest rates right now still don’t seem that high, you know, pre Great Recession, you were paying, you know, 11 12% and bragging about it. So they’re really not, they’re not at the historic lows that we just had, but they aren’t as low. They’re not really incredibly high just yet but they make a huge dent. In our last podcast, we talked about the difference between a 30-year loan, and how much it costs people. So it’s pushing people out of the market.
Ian R: Yeah. I mean, for, like you said, older than 30. It’s like, okay, we’ve been here before, but for a lot of the folks who may be entering the home market for the first time, you know, that haven’t seen these interest rates before. For them, it’s a clear turn-off, you know, because wow, that’s, that’s a big number to look at, you know.
Ian R: Yeah. So what it does basically is it pushes some people out of the market. Again, that is a sad fact. That’s kind of what part of what anyways, the Feds want to do, is to just stave off that kind of inflation, they want to induce a slight recession, or slow it down. The problem with this particular transition, is house prices aren’t really falling that much. They’re real, and actually, Dave Ramsey’s crew over there, said they don’t expect the house prices to fall. So if you want a $200,000 house a 100, a few 100 years ago, way back in my day, there’s an orange grove as far as I could see. If you want a $200,000 house a couple of years ago, and now it’s worth 300,000, depending on whose projection you’re looking at, it may go down to 285 290 or may just stay right at 300,000. So the sad social part of things is that still pushes some people out of the market they may never be able to get back into the introductory housing market. It does bode well-being for the fact of for home inspectors that as this transition happens, more inventory comes on the market. So more home sales are starting to fall through because of home inspection-related issues or attorney issues whereas before they would just get pushed through. So things are going back on the market BOMK is what the agents call it back on market. Also, some things that are happening are buyers being a little bit more careful. So instead of going out and buying a house this weekend, they’re taking a couple of months looking at a bunch of houses, they may even put an offer in on one, go through the inspection and then move on to their safety house or their backup house. So that is headed in the right direction for home inspectors. It’s a balancing that’s happening but the problem is, there were, you know, 50 plates up in the air. Now they had to set all the plates down and they’re starting to bounce it out. Again, all the plates haven’t been picked up. So it’s going to be a little bit of a rough ride for a little while longer. I had a prediction that is very subjective to me. I’ll give it towards the end but I want to hear your point there.
Beon DeNood: I always just look at the market numbers every day, you know, and looking at all the big guys in the real estate sector, you know, looking at, like Zillow and Redfin, and a few of the others. I mean, you look at where they’ve come what’s happened to them in the last year, oh, my goodness, it is, you know, their stock prices have tanked, just because of you know, the perception of where the market is going but the interesting thing I see is, as soon as there’s a bit of positive news, they shoot up by quite a few percentage points. It’s like it’s raring to go. But you know, relative to where we are. The only reason I think that is interesting in this conversation is it gives one perspective of kind of where we’ve come from and where we are right now, you know. Outlook and expectations for all the guys making money out of the real estate are on the low end but like you pointed out, that’s not necessarily a bad thing for the home inspectors, we needed to cool down because it was way too hot. So what I’m getting from you what you’re saying, Well, I guess I guess the predictions later on but is we’re gonna start swinging the right direction, but it’s not going to be sort of a super-fast process. Yeah. So
Ian R: Personally, I have a positive outlook on things. So in our last podcast, we talked about things like pre-listing inspections. To be perfectly frank, even some of our competition going out of business. That’s how I started three inspection companies have my competition went out of business, and I’m like, Okay, I’m the only one here after the dust settles, just because the housing market may not do well doesn’t mean we at home inspectors won’t do well, in fact, sometimes we do better when the housing market is down. So for the past year, people have been skipping home inspections, people don’t skip home inspections when it’s a buyers’ market. Then you double up on that because you get pre-listing inspections, our pre-listing inspection numbers have been down like nuts but now they’re going up again, because people are like, man, it’s a little bit harder to sell the house. This gives me an extra edge. If we look at I was looking at this other article from fortune.com. Not that I rely always heavily on that website, but they have some morbid predictions for the housing market in 2023. They’re talking like, crazy recession, not not as much as the great recession, but close to it, like the biggest one since then. All sorts of stuff but everything that I saw on their predictions is actually good for home inspectors. I think it’s going to help us out because we’re gonna have more pre-listing inspections, and we’re gonna have more foreclosures to work on. I always love doing foreclosures, showing up to a foreclosure charging a couple of 100 bucks for a pest inspection or doing a drive-by for 150 bucks and just making sure that the House didn’t burn down. Hey, cool, if you have a crew, or it’s just you do that in between inspections, and you end up making an extra couple of grand a week, I never, I never really had a problem. Matter of fact, some of our biggest first big years were right after the Great Recession. There are a lot of advantages, but I’ll say start pushing pre-listing inspections right now. Okay, because agents are worrying agents don’t think that way agents think, Okay, this is gonna be harder to sell this house next year, or even right now. That’s when you start saying pre-listing even Dave cleans this thing with the inspected houses, whatever angle you can do. Great, that’s because those are going to be big ones. Yeah,
Beon DeNood: That’s a good point. You know, you mentioned agents, because if we think of a sort of where they are, psychologically, they were flying high, right? A year ago, they were the kings of the market. Now while the numbers compared to last year are looking, they’re looking terrible. So to help them out to get get some more sales. If one were to even pitch pre-listing inspections to your agent, they’d probably be really receptive because it would help them to bring their numbers up a little bit.
Ian R: Yeah, so hopefully, we’re doing extra marketing right now because this is what’s happening in the home inspection market, as you’re sitting here listening to our podcast, beyond told you just now to pitch pre-listing inspections to agents, hopefully right now you’re going to offices and you’re doing presentations, you’re contacting every agent you’ve ever met, and pushing that service because what’s happening right now as you’re listening to this is someone in your service area just went out of business. If we were relying very heavily on the easy inspections and let’s be honest, it was easy inspections for a while I’ve been I’ve been in this business close to two decades, you know, you could just walk out the door and inspections fell in your lap all the way up to when people started skipping them. So if we came in the market, right about then we’re like, Yay, this is awesome and easy, it’s gonna get a little bit harder but every time one of our competition goes out of business, sad to see a home inspector go, I’ve always hated it. The guy that’s left, when the market picks up, he’s going to take that person’s business, there are already home inspectors right now that I’m in contact with on a regular basis, that is already taking advantage of that. So I’ll take the Midwest as an example, because the Midwest is probably getting hit the hardest right now, with a Down Home Inspection mark. I have a guy right now. Called me for advice because he’s just hitting 500 inspections for the year having his best year ever. He didn’t think about, you know, the market up or down? I’m like, How are you doing? He’s just like a marketing hard and I’m looking at the numbers. You know, a lot of his competition starting to go out of business. So whatever work does trickle in, those guys aren’t there. So let’s say 40 guys go out of business, they would have had five inspections each that year, the worst year ever, they still would have equated to what was that Beon, 200 inspections? Sure. So it’s just math, that’s just rough math of saying, if you can hang in there, you’re going to come out on top but this is going to be a rough winter, I am predicting a rough winter, it’s going to be a little bit low, there’s gonna still be not great inventory on the real estate market, there’s still going to be, you know, stuff going on in some areas, people still skipping inspections to a certain degree but here’s, here’s my prediction. I’ll just get right to it. You can tell me if you agree or disagree beyond but we’ll revisit this on our Q4, beginning of the next year 2023 podcast. I think by late spring, the dust will have settled not early spring or mid-spring, but I’m predicting late spring, the dust will have settled and will be officially in a buyer’s market. I think there’ll be a slight boom, all the way until about the end of summer, or maybe early fall. Then I think it’ll kind of level off and be my kind of rest of the year. Here’s the reason why. So I think it’s going to be a rough winter like I said, so, unfortunately, more inspectors are gonna go out of business. A lot of agents who are newer are gonna go out of business,
Beon DeNood: A lot of that is like sticker shock, high-interest rates. Yeah, they’re gonna keep people out.
Ian R: Yeah, and to be honest, too, you know, not everybody saved up six months’ worth of income that can handle, hey, you know, I’m not going to have a great business or enough business for the next six months. So they go get a job, they have another offer, they move to a different state, whatever, you got to do what you got to do for your family but by the time spring rolls around, people are gonna be a little hesitant, the seller is going to be like, maybe I should wait. By late spring, people will have, it’ll be the normal spring market where people start putting their houses on the market. Okay, so now there will be a rush of inventory and not enough inspectors. So then we’ll see a slight boom but by the time summer is done, I don’t think interest rates are going to go down a whole lot, if at all. So I think that’ll kind of wear off and then the rest of the year won’t be bad, but it won’t be great either. It’ll just be me. That’s my prediction. So I think by the time we have our next Q4 podcast on the market outlook for home inspections, I think it will be saying Hey, guys, alright, data winter, I know this stinks. Give it another, you know, three to five months but I’m thinking, you know, late April, May. That’s when the guys that are leftover, the inspection companies that are leftover, that’s when they’re really going to be kicking it. Okay, I’m seeing some other things happening too. So single guy inspection companies, you know, salmon is single Inspector, I don’t quote-unquote, go out of business. I just get some side jobs until things pick up. Okay. I see these big companies. So I just saw a home inspector get laid off by a big company with a bunch of other guys too. I saw another multi-inspector firm that has been multi-inspector for nearly 20 years go right back down to just the owner and helper. You know, firms that have 20 30, or more inspectors just dropping guys. So those guys, those big companies, can’t handle the same volume. So they were giving each one of their inspectors, let’s say three to 500 inspections a year. That guy doesn’t go out in the market typically and say I’m going to start my own business. A portion of them do, let’s say half of them do. That still leaves the other half to say, Okay, I’ll go get a different kind of job because I don’t want to run my own business. That’s oftentimes why they’re working for a company. So let’s say if they fire Five Guys, that’s 2500 inspections just sitting out on the market. That’s also going to add to it once the market turns around in the spring.
Beon DeNood: Okay, those numbers, those numbers make sense, because I’m just thinking, like, if you think in terms of the economy, and what the Feds been doing with the interest rates, the whole point of hiking, it is trying to cool things down trying to make borrowing money for businesses, for homebuyers, make it more expensive to the point where it’s unattractive. Then obviously, sadly, what happens is people start, you know, companies start laying people off to save money, just like you said, you know, even in the home inspection market, we’re seeing it but then it’s designed to cool to a point where they start easing back slightly. Then things are going to hopefully pick up from that point of view but what you’re saying is by next year, spring-ish, we’ll see late spring, what’s up late spring, late spring, so we look in like, like the middle of Q2 somewhere.
Ian R: Yeah, I’m thinking, as I said, I’m thinking like, late April, early May. Okay.
Beon DeNood: Got it, that even if interest rates don’t come down, we’re going to see a slight warming in the market, it’s going to kind of pick up a little bit.
Ian R: Yeah, I like that expression of slight warming. That’s basically it. I think 2024 is going to be the banger year 2023, I think is going to be meh. If we can hang on through the winter, that’s really what I’ve been telling guys are like, it’s slow and I don’t like Just hang on. Don’t feel bad, because things are slow. That doesn’t necessarily reflect on you as an inspector. Okay? If the market doesn’t have the houses and the inspections to support two inspectors in the market, it is what it is. I see a lot of companies so if a company with you know, 60 inspectors is laying guys off. Should you feel bad if you have a slow month? No. That’s why I keep a keep emphasizing we want to emphasize this is a positive outlook. This is the end of the time period when people were skipping inspections. This is where home inspection companies are made, grown, and built during a buyers’ market. Seller’s markets. Okay, cool. So it stays hot for a year or two and then all sudden, it turns into people skipping inspections again. I never like it when it’s that kind of market. It’s cyclical. This is a good thing for your business in particular, and our industry as a whole.
Beon DeNood: Okay, cool. Just so everybody knows the “meh” expression, as defined by the Oxford Dictionary is uninspiring, unexceptional. So just in case, you’re wondering,
Ian R: Is that what “Meh” mean?
Beon DeNood: So we got to change our outlook. We got to change the prediction.
Ian R: Well, no, that’s what I meant. I just didn’t know there was an actual definition. I mean, that described my feeling when I said “meh”.
Beon DeNood: Yeah, but so as an exclamation it’s Okay. Wait, let’s read it here. Meh is a colloquial interjection used as an expression of indifference or boredom and is often regarded as the verbal equivalent of a shrug of the shoulders. So “meh”.
Ian R: Yeah, but the way you say it sounds weird. Oh, you gotta say more manly like “meh.” That didn’t. Well, anyways, 2023 will be “meh” for the most part, and I think it’ll have a little bit of a boom in the spring. I think that Christian from repair Pricer had a good point. If we were building a big company, right now, we’re going to be a little bit nervous. Or if we are, you know, just kind of doing this as a side thing, or whatever, we might be a little nervous, small boutique company, we’re going to ride this out. I’m going to actually have a couple of podcasts on making keeping your inspection company boutique, because I’ve run the numbers is way more profitable. We’ve talked to a couple of guests about that, but boutique companies, we tend to make it you know, multi-inspector firms, when we say that we’re not talking 50-60. Guys, we’re talking small boutique, you know, under five inspectors, keep it small, keep it family-wise, that kind of thing. Anyways, that’s my prediction. Do you have anything to predict on top of that Beon?
Beon DeNood: No, not really, I think it makes sense to where things are, as far as the market cycle is concerned. As you said, I sort of feel the same way by 2024. You know, 2023 is kind of a recovery year. Yeah, 2024 Hang in there. If you’re able to make it through 2023, it will probably be a lot more comfortable than 2021. Let’s put it that way.
Ian R: Yeah, we’re over the worst of it. Yeah. In my opinion.
Beon DeNood: Awesome. I think that’s, that’s something we can obviously do in our next quarterly update. Let’s see, where are we looking? Yeah, that’s probably pretty accurate for where we are right now.
Ian R: Alright, so let’s see where we land because this is our fifth, fourth, and fifth quarterly market outlook and we haven’t been wrong yet. We gotta be wrong at least once beyond so let’s see how this goes.
Beon DeNood: Yeah, let’s see. Either way, you can just tell the guys hey, we said “meh”, you know.
Ian R: Yeah, we said “meh”.
Beon DeNood: Sounds good. Yeah, and thanks a lot for having me on again. It was a good one.
Ian R: Yeah. Thanks for being here Beon and everybody. Stay tuned, and we’ll have you on again.
Outro: On behalf of myself, Ian, and the entire ITB team, thank you for listening to this episode of inspector toolbelt talk. We also love hearing your feedback, so please drop us a line at [email protected].
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