Real estate investor sentiment trends further into positive territory

RCN Capital's sentiment survey finds optimism about current, future market conditions

Real estate investor sentiment trends further into positive territory

RCN Capital's sentiment survey finds optimism about current, future market conditions

Sentiment among real estate investors is on the upswing, with the fall 2024 iteration of the Investor Sentiment Index maintained by RCN Capital and CJ Patrick Company up 8 points from the previous quarter.

The index is derived from four key survey questions:

  • How does the environment for residential real estate investing compare to one year ago?
  • What’s your outlook for residential real estate investing over the next 6 months compared to today?
  • What do you expect home prices to do over the next 6 months?
  • How does the number of properties you plan to invest in over the next 12 months compare to the number of properties you’ve invested in over the past 12 months?

Investors are seeing improvement in both current conditions and conditions moving forward, with 68% of investors viewed today’s market as better or much better than it was one year ago, up eight percentage points from the last index report in July. In contrast, just 13% felt it was worse or much worse, down from 20% quarter over quarter.

As for the short-term outlook, 71% of investors expect it will continue to improve over the ensuing six months, up from 61% in July to reach the highest share of positive responses since the index was launched. Only 9% — a series low — expect conditions will erode, down from 14% in the prior survey.

“Investor sentiment is almost twice as positive today as it was in the third quarter of 2023, and they’re even more optimistic about the future,” said RCN Capital CEO Jeffrey Tesch. “It seems likely that investors are reacting to improving market dynamics — financing costs declining, the inventory or homes for sale increasing dramatically, and home price appreciation slowing down, but still rising.”

Investors appear mostly unified in the belief that prices will continue to grow; 70.6% of all respondents, 74.2% of home flippers and 58.5% of rental investors expect home prices to stay on the uptick. Most investors are also still concerned about a recession on the horizon, with 63.2% believing that the country is likely to enter one in 2024.

Home flippers are more bullish (by a wide margin) about market conditions, both present and future, than rental property investors. Over 80% of fix-and-flippers see improved market conditions over the past year, and over 83% see improvement over the next six months. Compare that to just 47% of rental property investors who see a better residential investment market now as opposed to last year and 51% who feel conditions will get better over the next six-month period. Nevertheless, rental investor sentiment is trending markedly upward: The share of rental property investors who see a better market now compared to last year is up by 12 percentage points from July.

Notably, while fix-and-flippers are more positive about the economy, a larger share of them expect a recession to materialize this year: 74.7% of home flippers are calling for a recession in 2024, compared to just 38.7% of rental investors.

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