Real Estate Investor Sentiment Up 16%

Real estate investor sentiment during the second quarter rose by 16% from the previous quarter, according to the new RCN Capital/CJ Patrick Company Investor Sentiment Index.

The new data report also found 60% of investors viewed today’s market as better or much better than it was a year ago, compared to only 20% who felt it was worse or much worse. Looking ahead, 61% of investors expected the market to continue improving while 14% expected it to decline – the highest percentage of positive responses and lowest percentage of negative responses since data was tracked.

Among the problems facing real estate investors, roughly 84% of those surveyed complained that rising insurance costs or the unavailability of insurance coverage was a factor in their decisions to buy and sell real estate, with nearly 68% stating insurance issues caused them to miss out on an investment opportunity. Also complicating matters was extreme weather, with 100% of the respondents who invest in California properties citing insurance issues as a consideration in their decision-making, and almost two-thirds (73%) said insurance problems had cost them a deal. In Florida, 83% acknowledged factoring insurance into their investment planning, and 67% noted that insurance issues had caused them to miss out on an opportunity.

Another problem was the prevalence of squatters, who were cited as a problem by 76% of respondents in their markets – and 53% of the respondents noted that they’d experienced problems with squatters on a personal level. The problem was more acute for fix-and-flip investors than for rental property owners: 90% of flippers cited squatters as an issue, compared to just under 50% of rental property investors.

“Despite numerous challenges, real estate investors feel much better about the investing environment today than they have over the past year and are equally optimistic about where the market is heading,” said RCN Capital CEO Jeffrey Tesch. “Rental property investors are slightly less positive than fix-and-flip investors, which may be due to rental prices flattening and even declining in many markets across the country.”

“It’s interesting to see some of the nuances in the investor sentiment data, and consider some of the implications” added Rick Sharga, CEO at CJ Patrick Company. “It appears that recent reports of increased flipping activity – and improvements in flippers’ gross margins – may be fueling some of the optimism from that set of investors. Meanwhile, flat and declining rent rates, an influx of hundreds of thousands of apartments, and rising property acquisition costs may be dimming the outlook for some rental property investors.”