Real estate investor sentiment was on the rise in the third quarter, according to the Fall 2024 RCN Capital/CJ Patrick Company Investor Sentiment Index.
The latest index report saw an eight-point increase from the second quarter, with 68% of investors viewing today’s market as better or much better than it was a year ago – in comparison, only 13% felt it was worse or much worse. Furthermore, 71% of investors polled for the index report expected the market to continue to improve, while only 9% expected it to decline – the highest percentage of positive responses and lowest percentage of negative responses since the inception of the RCN Investor Sentiment Survey.
“Investor sentiment is almost twice as positive today as it was in the third quarter of 2023, and they’re even more optimistic about the future,” said RCN Capital CEO Jeffrey Tesch. “It seems likely that investors are reacting to improving market dynamics – financing costs declining, the inventory or homes for sale increasing dramatically, and home price appreciation slowing down, but still rising.”
However, the survey also highlighted several problems impacting investors. Almost 80% of the respondents said that concerns about the cost and availability of insurance was a factor in their decision-making about investing in real estate – this was especially acute in states where extreme weather events caused insurance rates to soar and prompted some insurance companies to exit the local market. Squatters also appear to be a problem: over three-quarters of respondents – 77% – said that squatters were a problem in their area, with 43.6% experiencing the problem personally. And 70.6% of respondents believed that home prices will continue to rise in 2025.
The index is based on input by real estate investors to four key questions: (1) How does the environment for residential real estate investing compare to one year ago?; (2) What’s your outlook for residential real estate investing over the next six months compared to today?; (3) What do you expect home prices to do over the next six months?; and (4) How does the number of properties you plan to invest in over the next 12 months compare to the number of properties you’ve invested in over the past 12 months?
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