Investor sentiment in the single-family housing market has reached concerning levels, according to quarterly data from the RCN Capital and CJ Patrick Company Investor Sentiment Index. The survey, which tracks more than 300 participants in fix-and-flip and rental businesses, recorded an all-time low at the end of June following a decline in the previous quarter.
Respondent confidence has deteriorated significantly, with only 26% believing market conditions improved over the past year—the lowest figure since the survey began in 2023 and down from 35% in the first quarter. Conversely, 45% reported that conditions have worsened, marking the highest negative assessment in the survey’s history. Industry analysts identified multiple pressures contributing to this pessimism, including elevated financing costs, constrained inventory levels, escalating home and renovation expenses, and declining rental rates.
Higher borrowing costs have emerged as a primary concern, with more than half of investors calling financing expenses “one of the biggest problems in today’s market.” Mortgage rates reached recent lows at the end of February before rising sharply following geopolitical developments. Current rates now stand at their highest level in over a year. Three-quarters of respondents expressed skepticism about near-term rate relief, with some anticipating further increases.
The challenging conditions are directly affecting investment activity. Real estate investors purchased 23% fewer homes in the first quarter compared to the previous quarter and the same period in the prior year. Additionally, 32% of survey participants indicated they do not plan to purchase properties this year, while only 9% plan to exceed their acquisition pace from a year earlier. The survey predominantly captured responses from small to mid-sized investors who typically rely on bridge loans, investor-specific rental property financing, and conventional mortgages.
Despite these headwinds, investor expectations regarding home prices have shifted upward, with more than 60% now anticipating price increases over the next six months, compared to just under 52% in the previous survey. Higher valuations may increase acquisition costs for prospective purchases while benefiting the portfolios of existing property holders.
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