In a notable shift in market sentiment, real estate investors are expressing increased optimism about the current housing market. According to the Summer 2024 Investor Sentiment Survey conducted by Connecticut-based mortgage lender RCN Capital and business advisory firm CJ Patrick Co., 60% of surveyed investors view the market as “better or much better” compared to one year ago. This marks a 16% rise in investor sentiment from the previous quarter.
The sentiment index, which aims to capture the perspectives of real estate investors across the country, highlights a growing positive outlook despite ongoing challenges. RCN Capital CEO Jeffrey Tesch commented on the findings, stating, “Real estate investors feel much better about the investing environment today than they have over the past year and are equally optimistic about where the market is heading.” However, he noted a slight variation in sentiment between rental property investors and fix-and-flip investors, with the latter group feeling more positive. This difference could be attributed to flattening or declining rental prices in various markets.
Key findings from the survey include:
- Improved Market Perception: 60% of investors see the current market as improved compared to a year ago, while 20% view it as worse.
- Positive Outlook: 61% of respondents expect market conditions to improve further, the highest percentage of positive responses in the survey’s five iterations, while only 14% anticipate a decline.
- Segment Differences: Home flippers are particularly optimistic, with 73% reporting better conditions and 75% expecting continued improvement. Conversely, long-term buy-and-hold investors are less positive, with 35% seeing better conditions and 37% expecting improvement.
Interestingly, the survey revealed a disconnect between market optimism and economic forecasts. Despite their positive market outlook, 75% of fix-and-flip investors believe the U.S. will enter a recession this year, compared to 35% of long-term investors.
Investors are also showing a preference for local investments, with 92% of flippers and 86% of long-term investors planning to invest primarily within their home states. Rick Sharga, CEO of CJ Patrick Co., observed, “Recent reports of increased flipping activity and improvements in flippers’ gross margins may be fueling some of the optimism. Meanwhile, flat and declining rent rates, an influx of new apartments, and rising property acquisition costs may be dimming the outlook for rental property investors.”
The survey also highlighted significant concerns about rising insurance costs and the lack of insurance options, especially in areas prone to frequent weather events. Over 80% of investors cited insurance issues as a factor influencing their investment decisions, with nearly 70% having had deals halted due to insurance-related problems. These findings were notably higher compared to the first-quarter 2024 survey.
Additionally, squatters remain a prevalent issue, with 76% of respondents reporting it as a problem in their markets, including 53% who have personally dealt with illegal occupants.
As investor sentiment continues to evolve, these insights provide a valuable glimpse into the factors shaping the real estate investment landscape in 2024.
