What Do Home Service Franchises Look For in a Market?

For many home and real estate-related franchises, 2021 is shaping up to be a banner year.

In the first quarter of this year alone, Property Management Inc.*, whose franchise partners manage residential, commercial, association and vacation real estate, added 29 new locations. HomeTeam Inspection Service, a 150-plus location home inspection brand that helps buyers and sellers examine properties before sales, has seen revenue rise more than 30% year over year. And after adding interior design and renovation services to its mix, home staging franchise Showhomes continues its expansion, eyeing multiple new markets for 2021. 

Just as Realtors stress the importance of location, so too do real estate-related franchises. As they look to grow their brands, here’s what they’re looking for in a market.

Population Growth

For many real estate-related brands, population growth is a good indicator that their services will be in demand. Job growth and a business-friendly environment is one of the drivers of population growth, not only bringing new workers to cities but bringing new buyers and renters to that city’s real estate market. 

Building on three decades of positive growth, interior design and staging services, franchise brand Showhomes is looking to expand in the state of Texas, specifically in the Dallas-Fort Worth region, due to its explosive population growth. 

Between 2010 and 2020, Dallas-Fort Worth gained 1,349,378 new residents, ranking first among U.S. metropolitan areas. From 2020 through 2029, the Texas metro is projected to welcome another 1,393,623 newcomers — that’s 17.9% growth on top of the region’s current population of roughly 7,539,711.

“We’re looking to bring up to eight new units to the Dallas area over the next several years,” said Showhomes COO Matt Kelton. “The city’s growing population is looking to buy, and these particular buyers still expect perfection, even in a market where inventory is tight.”

Known as the millionaire capital of the country, the Dallas-Fort Worth area has 69,710 million-dollar households and is projected to add another 43,638 in the next five years.

“Showhomes currently stages the top 20% of luxury homes being sold across the nation,” Kelton added. “We believe Dallas is a particularly ripe market for home services.”

High Property Values

It makes sense that real estate-related franchises would look to grow in areas where property values are particularly high. For a brand like Property Management Inc., an area with high property means there’s likely to be a larger pool of renters, not to mention investment landlords who need help managing their rental properties. 

While the brand already has a solid presence of property managers in cities throughout Southern California, particularly along the coast, it is seeking to further strengthen its presence in the region, where the homeownership rate typically falls 10 percentage points below the national average.

According to Zillow, the typical value of homes in California is $668,300, nearly 2.5 times higher than the median national figure. Over the past year, California home values have shot up 15.4%.

“Southern California is one of the most prosperous markets in the world,” said PMI co-founder and CEO Steve Hart. “It’s no different for property management. Property values in Southern California are higher, and property management is very lucrative in that part of the United States. Property management within beach cities can be especially lucrative, and we want to take advantage of what the Southern California market has to offer.”

A Booming Real Estate Market 

While the real estate market has exploded in many areas across the country, according to a recent report from realtor.com, some housing markets are doing better than others and are likely to continue to do so after the pandemic is over. 

You might not be familiar with Coeur d’Alene in Idaho, but realtor.com says it boasts the hottest real estate market in the country. Rounding out the top five are Austin, Texas; Springfield, Ohio; Billings, Montana; Spokane, Washington and Lafayette, Indiana. 

For HomeTeam Inspection Service, which operates locations out of all five areas, a busy real estate market translates to busy real estate agents — a key component of the brand’s overall strategy. 

Leveraging a team-based model to provide better, faster inspections than other brands, HomeTeam has earned a reputation as the go-to resource for real estate agents (and their clients) looking for a short inspection window.

”Both real estate agents and home buyers want to reach the point of sale quicker, and our speed of service helps agents move the home buying process along quickly and seamlessly,” said HomeTeam President Adam Long. “Most homebuyers don’t know the first thing about home inspections, so they look to their agent for advice. The growth of our brand can largely be attributed to real estate agents, who really have become our biggest advocates.”

In 2020, a year that saw a marked increase in home sales across the U.S., HomeTeam’s revenue surged by 20% compared to the previous year, far outpacing even the rise in home sales.

With current 2021 data showing revenue up nearly 30% over last year, HomeTeam is looking to add 30 new franchise locations into the fold, expanding its presence to service more than 200 territories across the country.