The mood among the nation’s residential real estate investors is more worried than hopeful as their views on the current and future market outlook turn gloomy.
The Spring 2025 RCN Capital Investor Sentiment Index slipped for the second quarter in a row, falling nine points from the previous three months and 12 points for the year. It is down by 36 points after reaching 124, its highest level, in Fall 2024. The index was created in 2023 by RCN Capital, a direct private lender focused on non-owner-occupied residential properties, and CJ Patrick Company, a market intelligence firm for the real estate and mortgage sector.
Investor views of the current market dipped by seven points, and the outlook for the future slumped 10 points. The share of investors who consider today’s market better than a year ago dropped from 35% to 31%, and the percentage of those who felt market conditions had worsened jumped from 25% to 34%. Over the next six months, a third of investors expected improvement in the market and a third thought conditions would not change. A separate 33.3 percent expected things would get worse – a 14% jump from the previous quarter and the worst negative score since the survey began.
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Yet in response to a fourth question on whether investors planned to buy more or fewer properties in the year ahead, there was a two-point improvement in the number who planned to buy.
The mood among residential investors appears to track the downward trend of homebuilder and consumer sentiment, the report found. “Our survey results suggest that enthusiasm among both rental property and fix-and-flip investors is being challenged by economic uncertainty, rising home prices and insurance prices, and high finance costs,” said RCN Capital CEO Jeffrey Tesch. “Hopefully market conditions will become more favorable as we move into the important Spring and Summer months.”
The survey found that fix-and-flip investors were more optimistic about the market than rental property investors. More flippers (44%) thought the market had improved over the past year compared to other investors (17%), and their expectations for improvement over the next six months reflect a similar imbalance.
The two groups agree that home prices will continue to rise, but investors think home price appreciation is slowing down. Among both categories, 73% expect prices to decline, stay flat or show little growth in the year ahead. Just under half of all investors plan to buy the same number of properties in 2025 as they did in 2024, but 35% of flippers and 28% of investors intend to cut back.
Policies from the Trump administration also impacted all investors’ views of the economy. About 56% expect a recession in the next 12 months.
“Investors believe that deteriorating economic conditions may lead to a recession and are decidedly unenthusiastic about the Trump administration’s plans for higher tariffs and mass deportations,” said Rick Sharga, CEO of CJ Patrick Co.
Investors fear the effect of tariffs on increased costs, supply chain disruptions and reduced profit margins on flips or rentals. “Investors in California and Florida both noted supply chain disruptions already happening in their markets,” the report said. Almost half cited higher costs and difficulty in finding skilled workers as possible effects of deportations, but a third said their businesses would not be affected.
For the first time since the survey began, insurance issues were among the five most cited challenges respondents revealed. “Nationally, over 73% of all investors claimed that insurance costs or the inability to secure a policy factored into their decision on whether or not to make a real estate investment, and over 43% said that insurance problems had caused them to miss out on a deal,” the report stated.
Along with these and other challenges like the high cost of financing, rising home prices, and lack of inventory, flippers and investors alike see one more complication ahead: more competition from larger investors and from ordinary consumers anxious to buy a house.
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