Survey: Real estate investor confidence hits record low

The index has shed 36 points from its peak score of 124 in the fall of 2024.

“Investor sentiment is trending along the same lines as homebuilder sentiment and consumer sentiment, which recently recorded its second-lowest score in over 50 years,” Jeffrey Tesch, CEO of RCN Capital, said in a statement.

The survey, which gathers input from residential real estate investors nationwide, found that only 31% view the current housing market as better than a year ago — down from 35% in the previous quarter. At the same time, those who believe market conditions have worsened rose to 34%, up from 25% in late 2024.

The outlook for the next six months was mixed. About 34% of investors expect the market to improve, 33% think it will remain unchanged and 33% anticipate a decline. The negative outlook marked a 14-point increase from the prior quarter and was the lowest score for future expectations since the inception of the index.

The index measures investor views on four metrics: current market conditions, six-month outlook, home-price expectations and planned property acquisitions. Three of the four categories posted declines. The only increase was in planned purchases, although it remained the lowest-scoring category overall.

Tesch pointed to several factors that are weighing on investors, including rising home prices, higher insurance costs and persistently high mortgage rates.

“Our survey results suggest that enthusiasm among both rental property and fix-and-flip investors is being challenged by economic uncertainty,” he said. “Hopefully market conditions will become more favorable as we move into the important Spring and Summer months.”

Flippers more optimistic than long-term investors

The survey revealed a sharp divide between short-term fix-and-flip investors and long-term rental property owners.

About 44% of flippers said market conditions had improved over the past year, compared to only 17% of rental owners. Looking ahead, 48% of flippers were optimistic about the next six months, while only 17% of rental owners shared that view.

Both groups expect home prices to rise — but at a slower pace. Fifty-three percent of all respondents said prices will increase, including 58% of flippers and 49% of long-term investors. But 73% said they expect home-price appreciation to either be modest (less than 5%) or for prices to remain flat or decline.

Despite low enthusiasm, nearly half of all investors plan to maintain the same level of property purchases in 2025 as they did in 2024. Still, 35% of flippers and 28% of rental owners said they plan to buy fewer properties this year.

Economic uncertainty, tariffs and fears

Concerns about the broader economy are also weighing on investor sentiment. Fifty-six percent of respondents said they expect a U.S. recession in the next 12 months.

Uncertainty over policy initiatives proposed by President Donald Trump is also influencing the forecast. Investors expressed concern about the potential impacts of new tariffs and mass deportation efforts.

“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.

“Anticipating an environment with higher materials and labor costs, combined with a possible increase in unemployment which would weaken demand, appears to be clouding investors’ hopes for future growth.”

Sixty percent of respondents worried tariffs would increase costs, while 47% feared supply chain disruptions and 40% expected reduced profit margins. California and Florida investors reported existing supply chain issues in their regions.

Regarding deportations, 48% cited increased costs and 47% noted difficulty in finding skilled labor. One-third of investors believed immigration policies would have no impact on their business.

Insurance emerges as a major obstacle

Financing remains the top challenge, cited by 55% of investors. Other issues include rising home prices (41%), competition from larger investors (38%) and low inventory (33%).

For the first time, insurance was named among the top five concerns. Twenty-six percent of respondents cited high or limited insurance availability as a problem. In total, 73% said insurance factors affected their investment decisions, while 43% reported missing out on deals due to insurance issues.

Investors expect these challenges to persist. Both long-term and fix-and-flip investors said they anticipate increased competition from institutional and consumer buyers in the coming months.