54119 Conveyancing Services in the US Industry Report

The primary activities of this industry are Real estate settlement services Real estate title abstract services Real estate title search services Title search companies, real estate Para

IBISWorld Industry Report 54119

Conveyancing Services in the US

expected to stimulate industry growth

2 About this Industry

11 Industry Life Cycle

13 Products and Markets

19 Market Share Concentration

19 Key Success Factors

19 Cost Structure Benchmarks

21 Basis of Competition

22 Barriers to Entry

23 Industry Globalization

24 Major Companies

24 Fidelity National Financial Inc.

25 First American Financial Corporation

26 Stewart Information Services Corporation

27 Old Republic International Corporation

33 Industry Financial Ratios

34 Jargon & Glossary

This report was provided to

Seattle Pacific University (2134529962)

by IBISWorld on 31 December 2019 in accordance with their license agreement with IBISWorld

This industry is composed of companies and legal practitioners that provide conveyancing services to individuals and corporate clients Conveyancing, which

is the process of transferring ownership of land or property from one person or entity

to another, requires specialists to advise parties, prepare documentation and conduct the settlement process Other industry offerings include arbitration services, expert witness services and assistance with intellectual property claims

The primary activities of this industry are

Real estate settlement services Real estate title abstract services Real estate title search services Title search companies, real estate Paralegal services

Patent agent services (i.e., patent filing and searching services) Process server services

52412 Property, Casualty and Direct Insurance in the US

Operators in this industry directly underwrite insurance policies that protect from loss associated with property and casualty, title and other risks.

53132 Real Estate Appraisal in the US

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.

54111 Law Firms in the US

Lawyers may provide expertise in a range of areas or in specific areas of law, including real estate law.

54199 Credit Counselors, Surveyors & Appraisers in the US

Operators in this industry primarily provide quantity surveyor services, also known as cost estimation; estate appraisal services (except real estate); or consumer credit counseling services.

Industry Definition

Main Activities

Similar Industries

The major products and services in this industry are

Patent copyright and other intellectual property document services Process services

Title search and other document filing services Title, abstract and settlement services Other

About this Industry

For additional information on this industry

IBISWorld writes over 1000 US

industry reports, which are updated

up to four times a year To see all reports, go to www.ibisworld.com

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Year Revenue Employment

Revenue vs employment growth

Products and services segmentation (2019)

Revenue Volatility Medium

Industry Globalization Low

Competition Level Medium

Annual Growth 14–192.8%

Key External Drivers

Existing home sales

Key External Drivers Existing home sales

Existing home sales measure the sale of existent single-family homes, condos and co-ops in a given year The volume of sales is a key measure of demand for homes, which is the single largest asset for many families An increase in the volume of existing home sales boosts demand for conveyancing services and increases industry revenue Existing home sales are expected to increase in

2019, representing a potential opportunity for the industry

Value of private nonresidential construction

The value of private nonresidential construction comprises expenditures on office buildings, hospitals, factories and other nonresidential structures

Increased demand for nonresidential buildings causes the total number of

Executive Summary The Conveyancing Services industry

provides specialized legal services to individuals and businesses, generally in the context of property transfers or title disputes Operators offer title searches, document preparation, filing services, arbitration services and assistance with intellectual property claims Rising demand from real estate, increases in the number of housing starts and existing home sales, coupled with overall growth

in nonresidential construction, has sparked demand for industry services

Overall, industry revenue is expected to increase at an annualized rate of 2.8% to

$17.7 billion over the five years to 2019, including a projected growth of 1.0% in

2019 alone Industry profit, measured as earnings before interest and taxes, is expected to decline during the five-year period

Due to the fact that this industry’s performance is closely aligned with the health of the US real estate market, the industry has benefited substantially from surging growth in housing starts

Rebounding from a post-recessionary low, housing starts in the United States have increased at an annualized rate of

5.0% over the five years to 2019, bolstering the number of homes requiring industry services This trend has been reinforced by the growth in the value of construction, rising an

annualized rate of 2.1% during the current period Moreover, the consumer confidence index has increased at a strong annualized rate of 7.5% over the past five years, providing steady downstream demand for operators Although an overall increase in the 30-year conventional mortgage rate has increased the financial burden of homeownership, the strong demand from downstream markets have sustained and increased industry revenue

Over the five years to 2024, industry revenue is projected to continue rising, albeit at a slower pace due to slowdowns

in economic factors affecting real estate markets Moreover, house prices, as measured by the house price index, are expected to continue rising at an annualized rate of 2.3% after reaching highs during the current period, indicating that homes will become prohibitively expensive for many consumers

Tightening lending practices and anticipated increases in mortgage rates are expected to exacerbate industry threats Overall, IBISWorld estimates that industry revenue will increase modestly over the five years to 2024, rising at an annualized rate of 1.1% to $18.6 billion

Industry Performance

Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage

The industry has benefited substantially from

surging growth in housing starts

Key External Drivers

continued commercial property transactions to increase, which generates demand for

conveyancing services The value of private nonresidential construction is projected to increase in 2019

30-year conventional mortgage rate

The 30-year fixed rate mortgage is the most common type of loan for home purchases in the United States A decline

in mortgage interest rates will increase the level of home sales by making homes more affordable Therefore, as the 30-year conventional mortgage rate increases, industry revenue falls The 30-year conventional mortgage rate is expected to increase in 2019

of homes available for purchase, which then require conveyancing services as titles are transferred between parties Housing starts are expected to increase

in 2019

House price index

The house price index measures trends across the national housing market and adjusts for the quality, size and location

of homes An increase in this index indicates that homes are becoming more expensive, which limits real estate activity as many homes become too costly for consumers The house price index is projected to increase in 2019,

representing a potential threat to industry operators

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to rise an annualized 2.8% to $17.7 billion over the five years to 2019; this includes an anticipated 1.0% increase in 2019 The recovery of the US housing and commercial real estate markets have reinvigorated existing home sales, boosting demand for conveyancing services among individual consumers and businesses Similarly, steady improvements in the US financial sector and overall level of corporate profit have driven major corporations to invest more heavily in real estate, as illustrated by growth in the value of nonresidential construction over the past five years As these corporate clients have increasingly engaged in buying and selling properties, demand for title, abstract and settlement

services has risen However, industry growth has been somewhat hampered during the period due to steady growth in the house price index

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Surging real estate

activity Given that everyday individuals constitute an estimated 35.8% of the Conveyancing

Services industry’s total customer base, changes in the residential real estate market have a significant influence on industry performance Therefore, a large portion of the industry’s recent growth can

be attributed to the dramatic rise in the number of housing starts that occurred over the past five years This figure, which measures the number of new, privately owned housing units started in a given year, has increased at an annualized rate of 5.0% over the five years to 2019, largely as

a result of a low post-recessionary base and historically low mortgage rates Similarly, the volume of existing home sales has grown at an annualized rate of 1.8% during the same period, totaling an estimated 5.4 million sales in 2019 As the industry relies on real estate transactions, the Conveyancing Services industry has benefited significantly from surges in home construction and property sales

However, growth in the residential real estate market has been hampered by an increasing US house price index This

index, which measures changes in housing market prices, has increased at an

annualized rate of 5.0% over the five years

to 2019, representing a consistent rise in the prices of US homes While a large portion of this increase can be attributed to the housing market’s recovery following the economic downturn, the house price index has already substantially surpassed pre-recessionary peaks As a result, future increases in this index will likely indicate record-high home prices, negatively affecting industry revenue by restricting the number of consumers who can afford to engage in real estate activities Moreover, while the 30-year conventional mortgage rate has fluctuated year-to-year, this figure has exhibited an overall increase in recent years, growing at an annualized rate of 0.5% during the current period This growth makes homeownership relatively expensive, preventing some consumers from investing in real estate and hiring conveyancing service providers

Though the commercial real estate market’s revenue has not grown as dramatically as its residential counterpart

over the past five years, this sector’s growth has substantially helped providers of conveyancing services Over the five years

to 2019, for example, the value of private nonresidential construction has grown at

an annualized rate of 0.3%, increasing the number of buildings and properties in need

of industry services Moreover, improving

economic conditions have yielded steady increases in corporate profit, which has increased at an annualized rate of 2.5% during the current period Strong profit enables downstream companies to invest more heavily in properties and real estate, generating demand for industry services

Surging real estate

activity continued

Industry landscape The Conveyancing Services industry’s

market share concentration among the major players has risen over the past five years The industry’s four largest players primarily engage in property and direct insurance activities, while also generating industry-relevant revenue from title and escrow services Collectively, these companies account for an estimated 28.8% of total industry revenue in 2019

Most notably, Fidelity National Financial Inc (FNF) has increased its market share through a series of major acquisitions In particular, the company acquired Lender Processing Services Inc in January 2014,

which helped boost the company’s industry-relevant revenue while other operators experienced losses due to declining mortgage originations Despite consolidation among the industry’s major players, this industry has a large amount

of nonemployer enterprises, and more are expected to enter The total number

of industry enterprises is estimated to grow at an annualized rate of 3.0% to 36,040 companies over the five years to

2019 Furthermore, the total value of industry wages is projected to increase an annualized 1.9% to $5.4 billion during the same period

Increasing

competition Participation in this industry is highly sensitive to changes in its level of demand

In 2014, for example, the number of existing home sales declined 2.9% to 4.9 million sales, limiting demand for the industry’s residential title services As a result, industry revenue between 2013 and

2014 decreased 8.1% Even FNF, the industry’s largest player, recorded an industry-relevant profit margin decrease

of 3.7% Conversely, when existing home sales rebounded in 2015 with a 6.3%

increase, industry revenue also increased

a significant 5.6% The industry has experienced steady downstream demand during the current period, encouraging greater competition Over the five years to

2019, the number of industry establishments is expected to increase an annualized 2.8% to 38,764 locations and

the number of total employees is expected

to increase an annualized 2.0% to 109,915 workers These increases cause higher competition, especially among small operators and nonemployers, many of which already have lower profit As a result, the increased participation and employment has negatively affected industry profit Profit, measured as earnings before interest and taxes, is estimated to account for 14.3% of revenue

in 2019, down from 17.7% in 2014

Participation in this industry is highly sensitive to changes in its level of demand

slowing down their growth, there is still growth to be expected Additionally, rising private nonresidential construction and corporate profit over the next five years are expected to generate demand among businesses for industry services Overall, as a result of the general slowing down of major demand drivers, revenue growth is expected to slow over the next five years, anticipated to rise at an annualized rate of 1.1% to $18.6 billion over the five years to 2024.

Housing market

stabilizes Revenue growth is expected to be relatively modest over the next five years

as the recovery of the housing market slows For example, whereas the number

of housing starts has experienced strong growth in recent years, it is projected to increase at an annualized rate of 2.5%

over the five years to 2024, compared with an annualized 5.0% during the current period This means that new, privately owned housing units will be constructed at a more moderate rate in coming years, constraining demand for industry operators that perform research and prepare documents relating to the transfer of these properties Additionally, the number of existing home sales is expected to increase at an annualized rate

of 0.9% over the five years to 2024, compared with an annualized 1.8%

during the current period At the same time, the 30-year conventional mortgage rate is projected to increase at an

annualized rate of 1.1% over the next five years Access to loans and manageable interest rates are crucial to the growth of downstream housing and construction markets Increasing mortgage rates will likely temper demand for homes as they effectively become more expensive to purchase and pay the debt services for, thus repressing industry revenue growth

Revenue growth is expected to be relatively modest as the recovery of the housing market slows

Rising demand from

businesses Demand for industry services is highly dependent on real estate activity;

therefore, increased nonresidential construction will likely generate significant revenue for operators that specialize in providing conveyancing services to commercial clients

Additionally, major corporations are more likely to invest in new properties as their profit increases Therefore, as corporate profit is projected to grow at an

annualized rate of 1.4% over the five years to 2024, commercial real estate activity will likely increase, stimulating demand for industry conveyance and title abstract services

Increased business activity will further generate demand for other industry services Industry operators also provide patent, copyright and other intellectual property document services Although these services account for a relatively

Growing industry

participation Employment and enterprise figures for this industry are highly sensitive to

changes in industry profitability, since most participants are small operators that cannot remain in business when changes in the housing market and corporate spending cause profit to contract In recent years, industry profit, defined as earnings before interest and taxes, was slightly volatile, yielding surges in industry participation during periods of high profitability and swift declines in participation when profit decreased Over the five years to 2024, industry profit is forecast to remain

relatively constant, stagnating at 14.3% of revenue between 2019 and 2024 The number of operators in the Conveyancing Services industry is expected to increase consistently at an annualized 1.7% to 39,272 companies Total industry employment is also expected to experience modest growth during the outlook period, rising at an annualized rate of 1.2% to 116,396 workers

small proportion of total industry revenue, increasing corporate activity will likely cause revenue from this service segment to increase as corporations

invest more heavily in new marketing and product development activities that require patent copyright and other document filing

Rising demand from

businesses continued

Industry profitability has been somewhat volatile

Industry Life Cycle The Conveyancing Services industry

is in the mature stage of its life cycle, characterized by consolidation, low technological change and established product segments While the industry’s revenue has grown at a slightly faster rate than the overall economy over the five years to 2019, this substantial growth is largely a function of a low base caused by the subprime mortgage crisis rather than

a true long-term growth trend Over the 10 years to 2024, the industry’s contribution to the overall economy, as measured by industry value added (IVA),

is projected to rise an annualized 1.0%

Conversely, US GDP is projected to increase at an annualized rate of 2.0%

during the same period IVA growth lagging that of GDP indicates that the Conveyancing Services industry is steadily declining as a share of the national economy

Although industry participation has been increasing due to growing demand, market share concentration within the major companies has increased over the past five years, largely due high

acquisition activity For instance, in 2014, Fidelity National Financial Inc.’s

purchased Lender Processing Services Inc for $2.9 billion In 2019, the company is set to acquire Stewart Information Services Corporation, which

is only licensed in New York, for $1.2 billion once the New York Department of Financial Services approves the merger Nonetheless, the number of operators in the industry is estimated to increase at an annualized rate of just 2.5% to 39,594 companies over the 10 years to 2024 These trends indicate that industry growth has slowed down and industry operators are now competing for dominance in a finite market, reinforcing the industry’s mature status

This industry also exhibits a low level

of technological change and established product segmentation The only

technological innovation that has significantly transformed the industry in recent years has been the development of more sophisticated databases that facilitate online title searches However, this development does not represent a major change in the scope of services being provided Moving forward, technological change is expected to remain low, typical of mature industries

This industry

is Mature

Products and Services

Title, abstract and settlement services

Conveyancing is the term for the legal processes that are involved in the transference of property or real estate from one party to another During this process, operators in the Conveyancing

Services industry act on behalf of their clients, prepare documents for the transfer

of real estate titles and represent clients in meetings Similarly, settlements and closings involve the completion of contracts to transfer ownership of

Products & Markets

Supply Chain | Products and Services | Demand Determinants

Major Markets | International Trade | Business Locations

KEY BUYING INDUSTRIES

53121 Real Estate Sales & Brokerage in the US

Companies acting as agents and brokers use this industry when selling real estate to others.

99 Consumers in the US

Consumers use industry services when buying a home.

KEY SELLING INDUSTRIES 23611a Home Builders in the US

Single-family home builders construct new single-family housing, such as single-family detached houses and town houses.

23611b Apartment & Condominium Construction in the US

Multi-family home builders construct new multifamily residential housing units (e.g., high-rise, garden and town house apartments and condominiums).

23621 Industrial Building Construction in the US

Companies in this industry are responsible for the entire construction (including new work, additions, alterations, maintenance and repairs) of manufacturing and industrial buildings (except warehouses).

23622a Commercial Building Construction in the US

Commercial builders construct (including new work, additions, alterations, maintenance and repairs) commercial buildings and related structures.

23622b Municipal Building Construction in the US

This industry constructs, alters and maintains municipal buildings and related structures.

SOURCE: WWW.IBISWORLD.COM

Demand

Determinants The performance of the Conveyancing Services industry depends on the level of

activity in residential and commercial real estate markets This activity is affected by several factors, including population trends, the condition of the overall economy and new legislation

Industry revenue is positively affected

by increases in the volume of real estate sales or transfers, which tend to occur when the property market and the overall

US economy are strong For example, as levels of disposable income and

consumer confidence rise, everyday

Products and Services

continued property During a closing, the buyer delivers a check for the balance owed and

the seller signs the deed over A lawyer with the title company registers the new deed with the local land registry office and the seller receives a check for the proceeds

of the sale, minus closing costs and mortgage payouts In most jurisdictions, property transfer is official when a contract is registered at the local County Recorder’s office Historically, this segment has been a major component of industry revenue However, while existing home sales and housing starts have both experienced strong growth in recent years, these figures remain lower than their pre-recessionary levels, limiting demand for conveyancing and title abstract services Overall, revenue from title, abstract and settlement services is estimated to account for 65.8% of the industry’s total revenue in 2019

Title search and other document filing services

Companies that specialize in title search and other document filing services provide legal advice, representation and document drafting for individuals and businesses that are buying or selling property In 2019, this segment is expected to represent 15.0% of industry revenue Over the five years to

2019, this segment has grown as a portion

of total industry revenue due to rising activity in downstream residential and commercial real estate markets

orders that are used in judicial proceedings Over the past five years, this industry’s process services segment has represented a steady proportion of revenue, as sales from process services generally grow in line with the overall industry

Patent copyright and other intellectual property document services

Patent copyright and other intellectual property document services are estimated to constitute 2.1% of industry revenue in 2019 Operators provide assistance in preparing patent applications and often represent the patent applicant before bodies such as the Patent and Trademark Office Additionally, industry operators often conduct searches on current patent copyrights and research intellectual property laws Over the past five years, this segment has constituted a stable portion of total industry revenue

Other

Other services provided by industry operators include appraisals, arbitration, expert witness services, business and commercial law services, wills, estates and trusts Collectively, these offerings are estimated to account for the remaining 11.8% of total industry revenue in 2019

Products & Markets

Major Markets

The Conveyancing Services industry provides title abstract services, settlement and closing services, title searches and other document filling services Given this variety of services, many industry operators are engaged by both private businesses and individual consumers Additionally, a small percentage of industry services are provided to government agencies and nonprofit organizations

Businesses

Private businesses represent the single largest market for conveyancing services, with an estimated 60.6% of industry revenue derived from this market segment in 2019 Businesses typically purchase conveyancing, title abstract and settlement services to prevent legal disputes over property ownership during

or after sale Furthermore, businesses enlist the help of industry operators to

In addition, levels of real estate activity are seasonal, with higher volumes

registered during the spring and summer months In terms of population and demographic factors, population growth tends to strengthen underlying demand for housing and, in turn, services such as conveyancing and the transfer of real

estate titles Additionally, the diminishing average household size has increased demand for housing units, positively affecting industry revenue.Government legislation can also affect industry revenue For example, taxpayers who itemize their tax deductions have been able to deduct a significant portion

of the interest paid on their residential mortgages, which has substantially encouraged homeownership In theory, these deductions make homeownership more affordable, leading to increased real estate activity and greater demand for industry services

Major market segmentation (2019)

International Trade Operators in the Conveyancing Services

industry primarily offer conveyancing and settlement services to domestic clients Moreover, the service-based

nature of this industry’s activities makes

it difficult for operators to participate in foreign markets As a result, this industry does not engage in international trade

Major Markets

continued conduct final real estate settlements and file closing documents Businesses also

purchase patent, trademark, copyright and other intellectual property document filling services to ensure that all company brands and other forms of intellectual property are protected

Demand from private businesses for industry services have recovered significantly since the recession, some businesses that had access to capital were able to purchase real estate while property values were inexpensive and interest rates were at their lowest

However, now that the economy has largely recovered, more businesses are demanding industry services Businesses are expected to increase as a portion

of industry revenue, as demand for nonresidential real estate continues

to grow

Individuals

Individual consumers constitute the other major market for conveyancing services and are estimated to account for 36.9% of industry revenue in 2019

Individuals require conveyancing services

to ensure protection when purchasing homes and other real estate so that legal issues do not ensue after settlement

Individuals often require help from legal practitioners to look into liens, claims, deeds, tax records and maps to avoid property ownership disputes Individuals may also require other legal services such

as appraisals, expert witness services and commercial law disputes from industry operators As the overall economy improved, consumer confidence experienced consistent gains over the past five years, driving household demand for industry services

Government and nonprofit organizations

Government agencies and nonprofit organizations are estimated to account for the remaining 2.5% of industry revenue in 2019 More precisely, the federal government represents an estimated 1.1% of industry revenue, while state and local governments account for

an additional 1.3% of revenue The remaining 0.4% of the industry’s total revenue is derived from the real estate and property transfer activities of nonprofit organizations These government and nonprofit institutions typically employ industry services when purchasing land, filing for intellectual property or when these bodies are involved in property disputes

Products & Markets

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SOURCE: WWW.IBISWORLD.COM

Mid- Atlantic