Even with a maelstrom of trying circumstances in the residential real estate market of late, investors are optimistic about the months ahead, according to the Fall 2023 Investor Sentiment Survey from RCN Capital.
Seventy-two percent of investors polled by RCN and market intelligence firm CJ Patrick Co. said that market conditions for investors are the same or better than they were one year ago. Three-quarters of respondents indicated that they believe conditions will either remain stable or improve over the next six months.
Investor views on the current landscape is decidedly rosier compared to the spring iteration of the survey. Forty-nine percent of the participants in the most recent survey said that conditions are better than they were a year ago, compared to only 30% in the spring.
“Despite higher home prices, higher financing costs and limited inventory, real estate investors continue to express optimism about market opportunities today and in the months ahead,” RCN Capital CEO Jeffrey Tesch said. “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.”
“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, CEO of CJ Patrick Company. “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.”
Enhanced optimism, however, doesn’t necessarily mean that investors are playing looser with their funds. RCN’s survey suggests that investors still plan on being judicious with their capital, with only 22% planning to buy more properties than they did one year ago. Thirty-nine percent plan to buy the same number, with another 39% saying they will buy fewer properties than they did at this time last year.
High capital costs were the No. 1 current obstacle identified by investors as nearly 76% of respondents cited them as a hurdle to the investment market. Lack of inventory, at more than 42%, was mentioned by the second-largest share of investors, followed by competition from institutional investors at 33%, competition from consumer homebuyers at 29%, difficulty securing a loan at 22%, and supply chain delays at 22%.