It’s a challenging season for real estate investors as 2025 begins. A survey by RCN Capital and CJ Patrick Co.
reveals a gloomy outlook, with only 35% of investors feeling the market is better than it was a year ago.
Here’s a breakdown of the key takeaways from the Winter 2024 Investor Sentiment Survey:
Investor Confidence Takes a Hit
Sentiment dropped significantly compared to fall 2024, where 68% of respondents felt the market had improved.
This winter, just 42% believe conditions will get better in the next six months—a sharp drop from 71% in the fall.
Overall, investor sentiment hit its lowest level in a year, declining by 27 points to 97.
The Split Between Short-Term and Long-Term Investors
- Rental Property Investors: Only 31% think the market is better now than last year, and just 33% believe it will improve soon.
- Fix-and-Flip Investors: More optimistic, with 45% saying conditions have improved and 48% expecting things to get better in the next six months.
Challenges Investors Face
The survey highlights two major hurdles:
- High Financing Costs: With 30-year loan rates hovering around 7%, borrowing has become more expensive.
- Insurance Costs: Nearly 70% of investors said rising insurance costs affect their decisions, and over half reported deals falling through because of it. States like Florida were hit hardest due to recent hurricanes.
Positive Signs Amid the Challenges
Despite the struggles, 55% of investors believe home prices will keep rising.
Additionally, more investors plan to purchase properties in the near future, signaling hope for recovery.
Political Concerns
The changing political landscape adds uncertainty. With a new administration and potential policy shifts, investors are watching closely to see how federal initiatives might impact the housing market.
RCN Capital CEO Jeffrey Tesch noted that rising loan rates and rental price pressure likely dampened investor optimism.
However, industry experts believe that easing regulations and encouraging affordable housing development could help the market rebound.
As 2025 unfolds, investors are navigating a stormy market, but opportunities may still exist for those who adapt to the changing conditions.