Real estate investor sentiment rose 16% from the prior quarter and 60% of surveyed investors view the current housing market more favorably than a year ago.
That was the key conclusion of the Summer 2024 Investor Sentiment Survey released Wednesday by Connecticut-based mortgage lender RCN Capital and conducted by business advisory firm CJ Patrick Co. The survey’s sentiment index is “designed to track the pulse of real estate investors across the country and gauge their market outlook,” according to a joint news release.
“Despite numerous challenges, 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,” RCN Capital CEO Jeffrey Tesch said in a statment. “Rental property investors are slightly less positive than fix-and-flip investors, which may be due to rental prices flattening and even declining in many markets across the country.”
The newly released survey showed that 60% of investors view today’s market as “better or much better” compared to this time last year, while 20% viewed it as “worse or much worse.”
In terms of forward-looking sentiments, 61% of respondents expect the market to continue improving, compared to 14% who expect it to decline. That was the highest percentage of positive responses and the lower percentage of negative responses in the five iterations of the quarterly survey.
But there was a noteworthy divide between short-term fix-and-flip investors and long-term buy-and-hold investors when it came to market sentiment and outlook.
Home flippers were “overwhelming positive,” the report stated, with 73% reporting better conditions today compared to a year ago. And 75% of flippers expect conditions to continue improving. These shares dropped to 35% and 37%, respectively, among long-term investors.
But the data doesn’t indicate that the differing viewpoints are based on forecasts for the U.S. economy. Despite being more optimistic about the real estate market, 75% of fix-and-flippers think the U.S. will enter a recession this year, compared to 35% of long-term investors.
Most investors seem to be looking to mitigate risk by investing locally. Ninety-two percent of flippers and 86% of long-term investors said they will continue to invest primarily in their home states.
“It’s interesting to see some of the nuances in the investor sentiment data, and consider some of the implications,” Rick Sharga, CEO of CJ Patrick Co., said in a statement. “It appears that recent reports of increased flipping activity — and improvements in flippers’ gross margins — may be fueling some of the optimism from that set of investors.
“Meanwhile, flat and declining rent rates, an influx of hundreds of thousands of apartments, and rising property acquisition costs may be dimming the outlook for some rental property investors.”
More than 80% of investors said that rising insurance costs or the lack of insurance options in some markets — specifically those facing more frequent weather events — are influencing their decisions to buy or sell homes. Nearly 70% said that issues tied to insurance had stopped an investment deal. Both findings were “significantly higher” compared to the first-quarter 2024 survey.
Squatters are another frequent issue for investors as 76% of respondents cited them as a problem in their markets, including 53% who had firsthand experience with someone illegally occupying a property.
