Slightly more than half of real estate investors recently polled by RCN Capital believe market conditions are at least as good now as this time last year.

But investors have swapped slightly brighter outlooks on current market dynamics for gloomier perspectives on the next six months, a period very likely to include higher interest rates from the Federal Reserve and affordability limits on rental and purchase demand.

The RCN Capital Investor Sentiment Index rose from consecutive quarters of record lows in the spring and summer to a reading of 89 in the third-quarter survey, an increase of five points. The index uses 100 as the break-even point, with lower readings indicative of industry pessimism.

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Still, investors reported they are slightly less inclined to make new acquisitions over the next 12 months compared to how they felt a year ago, highlighting the divergence in investors’ outlooks.

Nearly 6 in 10 respondents said they believe the Iran war has had a negative impact on the real estate market, while roughly half report negative impacts from aggressive immigration enforcement and Trump administration tariff policies. About 39% expect conditions to improve over the next six months, compared with 36% in the summer survey.

“Investor sentiment has tracked closely with investor activity,” said Jeffrey Tesch, CEO of RCN Capital, in a press release.

Citing how investor purchases shrank in the first half of 2026 in alignment with weakening sentiment, Tesch noted that single-family investors have nevertheless maintained an active role “in stabilizing a housing market that’s suffering from a dearth of traditional homebuyers.”

Many of the largest mortgage lenders in the U.S. have flocked to originating business-purpose investor loans as typical purchase production and refinance demand have slowed for multiple years since the pandemic.

Sentiment among investors deteriorated sharply after the U.S. and Israel started the ongoing Iran war in late February, however, triggering an energy supply shock and related inflationary pressures.

After accounting for roughly 3 in 10 home sales in 2025, investors have retreated slightly this year with sales volumes broadly under pressure. Investors noted particular alarm about additional Fed interest rate hikes, which officials at the U.S. central bank strongly expect to make in coming months or quarters.

“Over 50% of the respondents agreed that this will make borrowing more expensive, increasing their financing costs and reducing their profitability,” said the report.

Growing financial strain on renters limits the ability to increase rents at a time when operational and holding costs have been increasing for landlords. Meanwhile, slow sales, higher acquisition and holding costs and softening home prices have been steadily eroding home flippers’ margins for multiple years.

Some studies show that over the past 18 months, more flippers are regularly selling completed properties for less than expected compared to those who are exceeding their price targets. But typical buyers face similar market pressures like elevated rates and tight budgets, leaving many sidelined.

The more non-investor homebuyers are sidelined, the more demand trickles into single-family rentals, stabilizing and supporting rent increases. The less competition for well-priced properties from traditional buyers, the better the acquisition price investors may be able to secure.

“But the impact of the war in Iran,” said Rick Sharga, CEO of business advisory firm CJ Patrick Co., which prepared the survey findings, “has soured investor sentiment, keeping it in line with consumer and builder sentiment, both of which are at or near all-time lows.”