Investor Sentiment Rebounds After 2-Year Low, Still Trails 2024 Levels
High financing costs remain a pervasive challenge for investors, cited by half of the respondents in a recent survey. U.S. real estate investors have regained some confidence over the summer, following a period of decline in sentiment that lasted for two consecutive quarters. This is based on findings from the Summer 2025 RCN Capital/CJ Patrick Company Investor Sentiment Index.
The index saw a climb to 102, reflecting a 16% increase from its spring level of 88, which was its lowest in two years. Despite the recovery, the sentiment still lags behind last year’s score of 116. The positive shift has been attributed to better perceptions of current conditions and a more optimistic outlook for the next six months.
RCN Capital’s CEO Jeffrey Tesch noted, “It’s interesting that investor sentiment seems to be moving in lockstep with consumer sentiment: both hit multi-year lows in April, but have been trending up since. In the case of investors, this could be due to market conditions that are shifting at least slightly in their favor, such as inventory of homes for sale rising by 30% from last year, and the rate of home price appreciation slowing down significantly, which improves affordability.”
The proportion of investors who view the housing market as better or much better than the previous year surged to 48% from 31% in the spring. Meanwhile, those who viewed it as unchanged declined to 26%, and those considering conditions worse decreased to 25%.
Looking forward, 49% of investors anticipate an improvement over the next six months, 30% foresee no change, and 20% predict a decline. Three of the four index components saw a rise: evaluations of the current market improved by 15 points, the future outlook jumped 18 points, and expectations for higher prices increased by six points. However, plans to purchase properties dipped by seven points.
Fix-and-flip investors remain more hopeful compared to rental property owners. Over 53% of flippers reported improved conditions over the past year, in contrast to 33% of rental investors, showing an increase from the previous quarter’s 17%. For the upcoming six months, 52% of flippers foresee improvement, compared to 40% of rental investors.
Overall, both groups expect prices to climb: 59% of all respondents, with 65% of flippers and 50% of rental investors sharing this belief. Nearly three-quarters predict a slowdown in appreciation to under 5% or a complete halt in the upcoming year.
In certain markets, there’s been a noticeable decline in home prices and rents. About a quarter of investors have reduced asking rents or sales prices, with 23% scaling back on investment activity and 26% expecting to make concessions within the next half-year.
Investment plans remain conservative: 26% of investors do not anticipate making any purchases, 46% intend to acquire up to five homes, 23% plan to buy six to ten properties, and 6% aim to purchase more than eleven.
Half of the surveyed investors are maintaining their buying pace from the past year, with 40% buying fewer properties and 10% purchasing more. The majority of investors, 82%, focus on purchasing properties within their home state.
Interestingly, 57% of investors expect a U.S. recession within the next year, although concerns about policies from the Trump administration, such as tariffs and deportations, have lessened compared to earlier surveys.
In the spring, 60% worried that heightened tariffs would inflate costs, while in the summer, 45% confirmed this had occurred. Additionally, 25% experienced supply chain disruptions, and 30% saw profit margins affected, whereas 28% noted no impact. Similar patterns were seen regarding deportation impacts, with 39% reporting increased labor costs, 45% finding it harder to recruit skilled workers, and 34% experiencing no effect.
Rick Sharga, the CEO of CJ Patrick Company, commented, “It appears that investors’ early fears about the impact of the tariffs and deportations being implemented by the Trump Administration on their businesses and on the economy have been worse than the reality, at least so far. It seems that investors are approaching the second half of 2025 with more optimism. Cautious optimism, to be sure. But a more positive outlook than we’ve seen in the past few quarters.”
Despite a rise in optimism, high financing costs are still identified as the most prevalent challenge by 50% of investors. Rising home prices and competition with other investors each troubled 34% of the respondents, a lack of inventory was an issue for 33%, and higher material and labor costs affected 25%.
Insurance costs and availability have become pressing concerns, with 73% marking it as an important factor in investment decisions, and 56% indicating that insurance complications led to deal losses.
The issue is particularly severe in states susceptible to extreme weather. In Florida, 90% of flippers deemed insurance a major deciding factor, with 81% experiencing deal losses due to insurance. In California, these figures were 86% and 64%, respectively.
For Florida rental investors, insurance sways decisions for 100%, with 85% having lost deals as a consequence.
Investor sentiment is showing signs of recovery, yet hurdles, notably from finance and insurance costs, continue to challenge the market as it navigates through 2025’s second half.
