Real Estate Investor Sentiment Surged in Q2: Survey

Investors who said market conditions are worse than a year ago were similarly split, with only 11% of flippers saying conditions are worse, compared with 36% of rental property investors who responded that way.

RCN said it does not appear that these differing opinions are based on expectations for the U.S. economy. Despite being more optimistic about the market, 75% of flippers believe that the economy is likely to enter a recession this year, while only 35% of rental property owners do. 

Both groups expect home prices to continue to rise, with 88% of flippers and 61% of rental property owners anticipating price increases. And nearly all of these investors said they plan to continue investing primarily in their home states.

Challenges Confronting Investors

Investors in the summer survey mentioned many of the same factors as major challenges to their success as in previous ones, although their responses reflected some changes to current market dynamics. 

Seventy-four percent of respondents cited the high cost of financing — the most frequently mentioned challenge. Lack of inventory replaced rising home prices as the second-most cited challenge. Investors also continued to say that competition from institutional investors and from traditional consumer homebuyers are major issues.

Looking ahead, investors appear to see market conditions shifting slightly, as only 67% noted the high cost of financing as a top concern, and also cited inventory issues and rising prices less often. At the same time, respondents also seem to expect more competition from both institutional and consumer homebuyers six months from now.

Some of these trends were similar for both flippers and rental property investors. Seventy-seven percent of flippers and 76% of rental investors said financing costs are a major challenge, and 46% and 45%, respectively, cited lack of inventory. 

But some significant differences about key challenges also emerged between the two groups. Fifty-three percent of flippers but only 35% of rental property investors cited competition from institutions, whereas 53% of the latter complained about rising home prices while just 21% of flippers did.

"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 Company, said in the 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."

The median home sale price in Henderson, Nevada, has grown nearly 8% year over year, according to Redfin. Credit: Adobe Stock