Investors in the single-family housing market reported their worst sentiment in at least three years, with 45% saying market conditions have deteriorated, according to the quarterly RCN Capital/CJ Patrick Company Investor Sentiment Index released this week. The survey polled more than 300 investors in the fix-and-flip and rental businesses at the end of June.
Just 26% of respondents said they believe market conditions are better than they were a year ago, the lowest share since the survey began in 2023 and down from 35% in the first quarter. The index fell for the second straight quarter to an all-time low.
Rising finance costs, limited inventory, escalating home and renovation costs, and downward pressure on rental rates drove the pessimism, said Jeffrey Tesch, CEO of RCN Capital, a private lender to real estate investors. The ongoing conflict in Iran also contributed to investor concerns, he said.
Mortgage rates hit a recent low at the end of February but rose sharply at the start of the war with Iran. Rates are now at their highest level in over a year. More than half of survey respondents said the high cost of financing is one of the biggest problems in today's market, according to the report. Three-quarters of them said they do not expect to see any rate relief anytime soon, and some expect rates to rise.
The vast majority of investors surveyed were small to mid-sized operators. That contrasts with large institutional investors covered by the recently enacted 21st Century ROAD to Housing Act, which will generally prohibit investors with at least 350 single-family homes from acquiring additional single-family homes. Small- to mid-sized investors tend to use bridge loans, special investor loans for rental properties, and conventional loans that are typically 30-year and fixed rate. Of those surveyed, 28% reported paying cash in their recent purchases.
Purchase activity fell sharply. Real estate investors purchased 23% fewer homes in the first quarter of 2026 than they did in the previous quarter and in the first quarter of 2025, said Rick Sharga, CEO of the CJ Patrick Company. The survey also shows that 32% of the respondents do not plan to buy any properties at all this year, and only 9% plan to buy more than they did a year ago, he said.
More than 60% of respondents expect home prices to rise over the next six months, up from just under 52% in the prior survey. Higher prices can raise investors' acquisition costs while increasing the potential value of properties they already own.
The sentiment index marks the lowest reading since the survey's inception in 2023. Investor confidence has now declined for two consecutive quarters as financing conditions tighten and acquisition opportunities narrow.