Real estate investor sentiment rose 16% from the previous quarter, with 60% of investors surveyed believing that the current real estate market is more optimistic than a year ago.
Here are the key takeaways from the Connecticut Mortgage Agency’s Summer 2024 Investor Confidence Survey released Wednesday Sunac Capital Conducted by Business Consultants CJ Patrick Company The survey’s sentiment index “is designed to track the pulse of real estate investors nationwide and assess their market outlook,” a joint press release said.
“Despite the many challenges, real estate investors feel much better about today’s investment environment than they have over the past year and are equally optimistic about the direction of the market,” RCN Capital CEO Jeffrey Tesch said in a statement. “Real estate investors are slightly less aggressive than fix-and-flip investors, likely due to flat or even declining rental prices in many markets across the country.”
A newly released survey shows that 60% of investors believe that today’s market is “better or much better” compared with the same period last year, while 20% believe that it is “worse or much worse.”
In terms of forward sentiment, 61% of respondents expect the market to continue to improve, while 14% expect the market to decline. This is the highest proportion of positive responses and the lowest proportion of negative responses among the five iterations of the quarterly survey.
But there is a significant divergence between short-term fixed-flip investors and long-term buy-and-hold investors when it comes to market sentiment and outlook.
Attitudes among homebuyers are “overwhelmingly positive,” the report said, with 73% saying conditions are improved today compared with a year ago. 75% of stock traders expect conditions to continue to improve. Among long-term investors, these proportions drop to 35% and 37% respectively.
But the data did not show that the differing views were based on forecasts for the U.S. economy. Despite being more optimistic about the housing market, 75% of “regular real estate speculators” believe the United States will enter a recession this year, compared with 35% of long-term investors.
Most investors seem to want to reduce risk by investing locally. 92% of stock traders and 86% of long-term investors said they would continue to invest primarily in their hometown.
“It’s interesting to see some of the nuances in the investor sentiment data and consider some of the implications,” CJ Patrick Co. CEO Rick Sharga said in a statement. “Recent reports of increased stock trading activity and stock trading gross margins It seems like the improved coverage may spark some optimism among this group of investors.
“At the same time, flat and falling rent levels, an influx of hundreds of thousands of apartments and rising property acquisition costs may dim the outlook for some rental property investors.”
More than 80% of investors say rising insurance costs or a lack of insurance options in certain markets, particularly those facing more frequent weather events, are affecting their decisions to buy or sell a home. Nearly 70% of respondents said insurance-related issues halted investment transactions. Both survey results were “significantly higher” than the first quarter 2024 survey.
Squatters are another common issue faced by investors, with 76% of respondents citing them as a problem in the market, with 53% of those surveyed having first-hand experience of illegally occupying properties.
