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Real Estate Investors Optimistic About Market Conditions

A recent Investor Sentiment Survey conducted by RCN Capital and market intelligence firm CJ Patrick Company reveals that 72% of real estate investors believe that market conditions have improved or remained the same as last year. Additionally, 75% of investors expect market conditions to improve or stay stable over the next six months.

Optimism Amidst Challenges

Despite challenges such as higher home prices, increased financing costs, and limited inventory, real estate investors continue to express optimism about market opportunities. According to a recent report from CoreLogic, more than one in four home sales are to investors, and interest from both rental property buyers and fix-and-flip investors remains strong.

Investor Sentiment Improving

Investor sentiment on the current state of the real estate market has improved since the Spring 2023 survey. Nearly half (49%) of investors now say conditions are better than they were a year ago, compared to 30% in the spring. Furthermore, 44% of investors believe that conditions will improve over the next six months, up from 30% in the previous survey.

However, despite the optimism, investors are proceeding cautiously. Only 22% plan to buy more properties than they did a year ago, while 39% plan to buy the same number and 39% plan to buy fewer.

Fix-and-Flip Investors More Optimistic

Interestingly, fix-and-flip investors seem to be more optimistic about future opportunities, with 50% of them believing that conditions will improve over the next six months, compared to just 24% of rental property investors. This could indicate that flipping activity has bottomed out, but it may also reflect current challenges in the rental market, such as declining rates and increasing rental inventory.

Recession Looming, But Home Prices Expected to Rise

Despite their optimism, over half (53%) of the surveyed investors believe that the U.S. will enter a recession in 2023 or 2024. However, even with a potential recession on the horizon, investors overwhelmingly believe that home prices will continue to increase. Almost 53% expect home prices to go up, while 22% believe prices will remain about the same, and 24% believe they will decrease.

Main Challenges: High Finance Costs, Limited Inventory, and Competition

Investors in the fall survey cited high finance costs, limited inventory, and competition from other buyers as their main concerns for the coming months. The high cost of financing was the biggest issue among investors, mentioned by almost 76% of respondents, while lack of inventory was mentioned by over 42%. Competition from institutional investors was noted by 33% of respondents, and competition from consumer homebuyers was mentioned by 29%.

Most Investors Stay Close to Home

A new question added to the fall survey asked investors where they purchased their investment properties. Most investors focus close to home, with 44% purchasing within their hometown and 79% within their home state. There were no significant differences in purchase distances between fix-and-flip and rental property investors.

In conclusion, real estate investors remain optimistic about market conditions and opportunities, despite the challenges they face. As an investor, staying informed about market trends and working with an experienced REALTOR® can help you navigate the ever-changing real estate landscape and make the best decisions for your investments.

Orginal article: Link To Article – provided by Kansas City Realtors