Investor Sentiment Rebounds After 2-year Low, Still Trails 2024 Levels

U.S. real estate investors grew more confident in the summer after sentiment fell sharply for two straight quarters, according to the Summer 2025 RCN Capital/CJ Patrick Company Investor Sentiment Index.

The index climbed to 102, marking a 16% improvement from 88 in the spring — its lowest level in two years.

Despite the improvement, the measure remains below last year’s reading of 116. The rebound was fueled by stronger views of current conditions and a more positive six-month outlook.

“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,” said RCN Capital CEO Jeffrey Tesch. “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.”

Market views improve

The share of investors who said the housing market was better or much better than a year earlier jumped to 48% from 31% in the spring. Those who saw it as unchanged dropped to 26% — and those viewing conditions as worse fell to 25%.

Looking ahead, 49% expect improvement in the next six months, 30% expect no change and 20% foresee a decline.

Three of the four index components rose: current market views gained 15 points, the future outlook increased 18 points, and expectations for higher prices rose six points. Plans to buy properties slipped seven points.

Flippers more upbeat than landlords

Fix-and-flip investors remain more optimistic than rental property owners. More than 53% of flippers said conditions had improved over the past year, compared with 33% of rental investors — though that was up from 17% the prior quarter.

For the next six months, 52% of flippers expect improvement, versus 40% of rental investors.

Both groups believe prices will rise: 59% of all respondents, 65% of flippers and 50% of rental investors. Nearly three-quarters expect appreciation to slow to less than 5% or stop altogether in the next year.

Adjusting to market changes

In some markets, home prices and rents have begun to decline. About 25% of investors reported lowering asking rents or sales prices, 23% reduced investment activity and 26% anticipate making concessions within six months.

Purchase plans are modest; 26% intend to make no purchases, 46% plan to buy up to five homes, 23% will buy six to 10 and 6% will buy more than 11.

Half said that matched their buying pace over the past year, while 40% bought fewer properties and 10% bought more. Most investors — 82% — purchase properties in their home state.

Economic concerns, policy impacts

Nearly 57% expect a U.S. recession within a year. Concerns about Trump administration tariffs and deportations have eased compared with earlier surveys.

In the spring, 60% feared higher tariffs would raise costs; in summer, 45% said they had. Similarly, 25% reported supply chain disruptions and 30% saw profit margins affected. About 28% saw no impact.

Deportation impacts were closer to expectations; 39% reported higher labor costs, 45% said finding skilled workers was harder, and 34% saw no effect.

“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,” said Rick Sharga, CJ Patrick Company CEO. “So 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.”

Financing, insurance top concerns

High financing costs remain the most-cited challenge, reported by 50% of investors. Rising home prices and competition from other investors each drew 34%, lack of inventory 33%, and higher material and labor costs 25%.

Insurance costs and availability are a growing concern — with 73% calling it an important factor in investment decisions and 56% saying insurance issues caused them to lose a deal.

The problem is acute in states hit by extreme weather: in Florida, 90% of flippers consider insurance a major factor and 81% lost a deal due to insurance; in California, those figures are 86% and 64%, respectively.

Among Florida rental investors, 100% said insurance influences decisions and 85% reported losing a deal because of it.