Housing investors report worst market conditions in at least three years
Investor sentiment in the single-family housing market is experiencing a notable decline, driven by concerns over rising interest rates, increasing insurance costs, and geopolitical tensions, particularly the ongoing conflict in Iran. Recent data illustrates a significant downturn in confidence among real estate investors, with the RCN Capital/CJ Patrick Company Investor Sentiment Index reporting its lowest levels in the survey’s three-year history.
As of late June, the sentiment index indicated that only 26% of over 300 surveyed investors felt the market conditions were better than a year ago, a decrease from 35% recorded in the first quarter. Meanwhile, a significant 45% of respondents acknowledged that market conditions have deteriorated, marking the highest level of pessimism since the survey’s initiation. Jeffrey Tesch, CEO of RCN Capital, emphasized multiple factors fueling this negative outlook, including escalating finance costs, limited housing inventory, and rising home and renovation prices.
The survey revealed that most participating investors are small to mid-sized operators, contrasting sharply with larger institutional investors affected by legislative changes under the 21st Century ROAD to Housing Act, which restricts additional acquisitions by those owning at least 350 single-family homes. Most small- to mid-sized investors rely on bridge financing, specialized investor loans, and traditional fixed-rate mortgages. Notably, 28% of respondents reported that they have been making cash purchases recently.
In terms of mortgage rates, they briefly fell to a low point at the end of February but have since surged following the outbreak of the Iran conflict, currently reaching their highest levels in over a year. The high cost of borrowing has emerged as a major concern, with over half of the survey’s respondents identifying it as a primary obstacle in today’s market. The outlook on interest rates remains bleak, as three-quarters of investors do not foresee rate relief any time soon, with some even predicting further increases.
This sentiment shift is profoundly impacting market dynamics. According to the report, real estate investors reported a 23% decrease in home purchases in the first quarter of 2026 compared to both the previous quarter and the first quarter of 2025. Alarmingly, 32% of respondents indicated that they do not plan to acquire any properties this year, while only 9% expect to make more purchases than they did last year. However, there is an expectation of rising home prices, as over 60% of respondents believe prices will ascend over the next six months, up from approximately 52% in the previous survey. Increased prices may heighten both acquisition costs and the value of existing properties for these investors.
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