Real estate investors are expressing a strong positive sentiment about current market conditions and foresee a bright future, according to the Fall 2023 Investor Sentiment Survey from RCN Capital.
Despite challenges like rising home prices, increased financing costs, and a limited housing inventory, 72% of respondents said the investment climate is better or the same as the previous year. Additionally, 75% believe this trend will either stay stable or further improve over the next six months.
“Investors continue to play an important role in the housing market – according to a recent report from CoreLogic, more than one in four home sales is to an investor, and we continue to see interest from both rental property buyers and fix-and-flip investors in our business," Jeffrey Tesch, CEO of RCN Capital, said.
Notably, the current sentiment marks an improvement from the Spring 2023 Survey. While 49% now believe conditions are better than the previous year, only 30% felt the same in the spring. As for future expectations, 44% now anticipate an improvement, up from 30% in the previous survey. However, investor actions remain cautious, with only 22% planning to acquire more properties than last year.
“Interestingly, fix-and-flip investors seem much more optimistic about future opportunities – 50% of them believe that conditions will improve over the next six months compared to just 24% of rental property investors,” said Rick Sharga, CJ Patrick Company CEO. “That may be an indication that flipping activity has bottomed out, but may also be a reflection of current challenges in the rental market, with rates continuing to decline even as more rental inventory comes online.”
With over 30% of investors observing a decreased demand for owner-occupied homes and roughly 21% noting an increase in the appeal for rental properties, the impact of rising mortgage rates is evident.
However, not all skies are clear. A significant 53% of those surveyed anticipate the U.S. entering a recession within the next two years. But even with such economic concerns, the majority still expects home prices to surge.
The survey also reiterated challenges flagged in the spring survey, including high finance costs, flagged by 76% of investors, and a 42% mention of the lack of inventory. Competition remains a notable concern, with both institutional investors and consumer homebuyers vying for the limited available properties.
In a newly added survey question, a notable trend emerged: 44% of investors predominantly purchase properties within their hometown, and a whopping 79% operate within their home state, indicating a preference for local markets among both fix-and-flip and rental property investors.
