RCN Capital: Real Estate Investor Optimism Grows

(Image courtesy of RCN, Breakout image courtesy of Sean Valentine/pexels.com)

RCN Capital, South Windsor, Conn., released its Fall 2024 RCN Capital/CJ Patrick Co. Investor Sentiment Index, finding that 68% of real estate investors view today’s market as better or much better than it was a year ago.

Only 13% believe it was worse or much worse.

Investors believe that the market will continue to recover, with 71% saying they expect further improvement and only 9% anticipating a decline.

“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.”

The three biggest challenges facing real investors listed by respondents included the high cost of financing (62.88%), competition from institutional investors (43.56%) and lack of inventory (39.57%). Those are consistent with the top three challenges that investors anticipate they’ll be facing in six months.

Insurance costs and availability also loom large–79.75% said rising insurance costs or the inability to insure properties are a factor in the decision to invest in real estate. And, 64.11% said rising insurance costs have caused them to miss out on an opportunity to buy or sell their property.

Looking forward, 36.5% believe home prices will increase by more than 5% over the next six months, and 34.05% believe they will increase by less than 5%. And, 18.4% believe they will stay about the same, 8.59% believe they will decrease by less than 5% and 2.45% believe they will decrease by more than 5%.

Impression of the overall economy moving forward is a little less rosy–with 63.1% believing that the economy will still enter a recession before the end of 2024.