Higher Financing Costs, Limited Demand Due to Worsening Affordability for Homebuyers and Renters Among Factors Keeping Investor Sentiment Weak
To download the full version of the Fall 2026 Investor Sentiment Survey, click here.
SOUTH WINDSOR, CT – October 21, 2026 – Real estate investor sentiment improved modestly after falling for two consecutive quarters, recovering from an all-time low index score of 84, and improving to 89 in the Fall 2026 RCN Capital/CJ Patrick Company Investor Sentiment Index (ISI)™. The index score marked the third consecutive quarter with a score below 90 and was 12 points lower year-over-year.
Two noteworthy factors appear to be influencing investor sentiment. First, the war in Iran, which nearly 60% of investors feel has had a negative impact on the real estate market. Some 40% cite increased energy costs and rising inflation due to the conflict, which they claim has impacted profitability and reduced demand from prospective homebuyers and renters.
Investors are also nonplussed by the recent action by the Federal Reserve to raise the Fed Funds rate. Over 50% of the respondents agreed that this will make borrowing more expensive, increasing their financing costs and reducing their profitability. There’s also a concern that higher interest rates, which have already manifested themselves in mortgage rates climbing to 7.5%, will further hamper affordability for consumers looking to purchase a home, and put more strain on consumer finances for potential renters.
“Investor sentiment has tracked closely with investor activity – industry reports note that investor home purchases in the first two quarters of 2026 were down by 22% from a year ago,” said RCN Capital CEO, Jeffrey Tesch. “Hopefully, the improvement in their outlook in our Fall survey is an indication that we’ll see investors resume their important role in stabilizing a housing market that’s suffering from a dearth of traditional homebuyers.”
According to the Fall 2026 RCN Capital Investor Sentiment Survey™, the percentage of investors who viewed today’s market as better or much better than it was a year ago, improved from just under 26% in the Summer to 37%, the highest number in three quarters. Those who viewed the market today as being worse fell from 44% to 38%. Similarly, 39% of the investors believe that conditions will improve over the next six months, up from 36% in the previous survey; and the number expecting conditions to worsen held steady at 30%.
“Real estate investors were already dealing with difficult market conditions – relatively high financing costs, limited inventory, rising home prices, and weak demand,” said Rick Sharga, CJ Patrick Company CEO. “But the impact of the war in Iran – higher inflation, higher fuel prices, even higher lending costs – has soured investor sentiment, keeping it in line with consumer and builder sentiment, both of which are at or near all-time lows.”
Many Investors Finance Purchases, So Lending Costs are Critical
Investors responding to this survey mostly finance their property purchases – just under 20% said they made cash purchases – so the high cost of financing continues to be a major headwind. Investors use a variety of loan types to buy properties, including bridge loans, DSCR loans for rental properties, and conventional loans (typically 30-year, fixed-rate loans). Just over half of rental property investors use conventional financing once a tenant is in place.
Unsurprisingly, the high cost of financing continues to be cited as the biggest challenge faced by investors in today’s market: over 70% of respondents claimed this was one of the biggest problems today. And almost half of the investors surveyed (45%) don’t expect to see relief anytime soon, anticipating that interest rates will stay above 7% between now and the end of the year.
Investor Buying Plans Mostly Status Quo
The Fall survey respondents differed a bit from those surveyed in the Summer when it came to their buying plans. About 36% plan to buy between 1-5 properties, down significantly from 55% in the Summer; on the other hand, 26% plan to buy between 6-10, a huge increase from last quarter’s 10%; and the percent who plan to buy 11 or more properties doubled, from 3% to 6%. The number of investors who plan to make no purchases in 2026 fell two points, from 32% of respondents to 30%.
For the majority of investors (50%), this is about the same number of properties they purchased in the last 12 months. Only 7% plan to buy more properties than last year, down from 9% last quarter; while about 43% plan to buy fewer, up from 36% in the prior quarter.
In terms of market outlook, the contrast was stark between rental property and fix-and-flip investors. Only 13% of rental investors expected market conditions to get better in this most recent survey, while over 50% expected them to worsen. Flippers’ sentiments were almost diametrically opposed, as over 56% of them believed conditions would improve, and just 17% feared that situations would be less favorable in the months ahead.
Insurance Challenges Continue to be a Concern for Real Estate Investors
Insurance costs and limited availability of insurance continue to concern real estate investors. Nearly 80% of the respondents said that insurance issues were a factor in their investment decision-making, and 63% said insurance-related factors had caused them to miss out on a deal. Both of these results were more than 10 points higher than in the previous survey.
There were also significant differences between flippers and rental investors in their views on insurance: almost 90% of fix-and-flip investors claim that insurance issues are part of their decision-making process, compared to 69% of rental property investors. And flippers have also lost out on more deals than rental investors, 73% vs. 50%.
Most Investors Expect Home Prices to Rise
Despite higher mortgage rates, almost two-thirds of the investors surveyed expect home prices to rise by the end of the year. Over 66% of the respondents said they anticipate higher home prices over the next six months. Almost 43% of the respondents expect those price increases to be higher than 5%, significantly higher than year-to-date price appreciation. On the other end of the spectrum, the number of investors expecting price declines fell by two points, from 13% last quarter to 11%.
Immigration and Tariff Policies Having an Impact
Over 48% of the respondents said that immigration policies had made it harder for them to find and keep skilled workers – a 16-point jump from last quarter’s results. The number of investors who said immigration policies had increased their construction costs rose from 29% to over 36%. And the number who said that these policies had little or no impact on their investing declined from 50% to just under 38%.
Tariffs also continue to be unpopular among investors: over 62% of investors felt that tariffs had resulted in higher prices on products and materials, up from 48% last quarter; 28% said they’d seen a reduction in their net margins, up two points from the last survey; and 26% said they’d noticed a disruption in supply chains, also rose by six points, from 26% to over 32%. Only 25% of the investors felt that tariffs did not have an impact on their business, down from 30% in the last quarter.
Rising Home Prices, Rising Material Costs, and Limited Inventory Major Challenges
The major challenges cited most often by investors in the Fall survey were similar to those noted in prior reports. But higher interest rates resulted in the number of investors concerned about the high cost of financing to spike, rising from 55% to over 70%. Rising home prices were noted by 38% of respondents, a 10-point dip from the prior quarter. Other frequently mentioned challenges included lack of inventory (31%), and rising material and product costs (23%).
To download the full version of the Fall 2026 Investor Sentiment Survey, click here or on the image below:
Q: What is the Investor Sentiment Index (ISI)?
A: The RCN Capital/CJ Patrick Investor Sentiment Index™ (ISI) was designed to track the pulse of real estate investors across the country and gauge market outlook. The ISI is based on a quarterly survey of residential real estate investors and focuses on their responses to four specific questions:
More detailed methodology available upon request.
Q: Are real estate investors becoming more optimistic about the market?
A: Investor optimism improved modestly in the Fall 2026 survey. 37% of investors said today’s market is better or much better than it was a year ago, while 39% expect market conditions to improve over the next six months.
Q: What is the biggest challenge facing real estate investors in 2026?
A: The high cost of financing is the most frequently cited challenge, with more than 70% of surveyed investors identifying it as a major concern. Rising home prices, limited inventory, and higher material and product costs are also significant challenges.
Q: How are higher interest rates affecting real estate investors?
A: Higher interest rates are increasing borrowing costs and putting pressure on investor profitability. More than half of surveyed investors believe the Federal Reserve’s recent rate increase will make borrowing more expensive, while 45% expect interest rates to remain above 7% through the end of the year.
Q: How are insurance costs affecting real estate investment decisions?
A: Insurance is playing an increasingly important role in investment decisions. Nearly 80% of investors said insurance issues factor into their decision-making, and 63% reported missing out on a deal because of insurance-related factors.
Q: Do real estate investors expect home prices to increase?
A: Yes. More than 66% of investors expect home prices to rise over the next six months, while nearly 43% anticipate increases of more than 5%. Only 11% expect home prices to decline.
Q: Are fix-and-flip and rental property investors equally optimistic about the market?
A: No. More than 56% of fix-and-flip investors expect market conditions to improve, compared with only 13% of rental property investors. More than half of rental investors expect conditions to worsen.
Q: How are tariffs and immigration policies affecting real estate investors?
A: Investors report that both are contributing to business challenges. More than 62% said tariffs have increased prices for products and materials, while more than 48% said immigration policies have made it harder to find and retain skilled workers.
Q: How many properties do real estate investors plan to buy in 2026?
A: Buying plans vary. About 36% expect to purchase one to five properties, 26% plan to purchase six to ten, and 6% plan to acquire 11 or more. Meanwhile, 30% said they do not plan to make any purchases in 2026.
About RCN Capital
RCN Capital is a South Windsor, CT-based national, direct, private lender. Established in 2010, RCN provides investment loans for the purchase or refinance of non-owner-occupied residential properties. The company specializes in new construction financing, short-term fix & flip and bridge financing, and long-term rental financing for real estate investors. For more information on RCN Capital and RCN’s loan programs, visit www.RCNCapital.com.
About CJ Patrick Company
Founded in 2019, CJ Patrick Company is a Market Intelligence and Business Advisory firm working with companies in the real estate and mortgage industries. Visit www.cjpatrick.com for more information.
Contact:
Erica LaCentra
RCN Capital
(860) 432-4782
Rick Sharga
CJ Patrick Company
(949) 322-4583