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Conflict in Iran, Rising Costs, and Weakening Demand Among Factors Causing Investors to Sour on Current Market Conditions. Outlook for Future Conditions Somewhat Better.
To download the full version of the Summer 2026 Investor Sentiment Survey, click here.
Key Takeaways:
- Investor sentiment fell to a record-low index score of 84, marking the second consecutive quarterly decline and an 18-point drop year-over-year.
- Only 26% of investors believe market conditions are better than a year ago, while a record 45% say conditions have worsened.
- High financing costs remain the biggest challenge, with 55% of investors citing lending costs as a major concern and 73% expecting rates to stay elevated or rise.
- Despite current pessimism, 34% of investors expect market conditions to improve over the next six months, and more than 60% anticipate home prices will increase.
- Insurance costs, tariffs, limited inventory, and rising home and renovation expenses continue to pressure investors and influence purchase decisions.
SOUTH WINDSOR, CT – August 4, 2026 – Real estate investor sentiment fell for the second consecutive quarter, hitting an all-time low index score of 84 in the Summer 2026 RCN Capital/CJ Patrick Company Investor Sentiment Index (ISI)™. The index score was three points lower than the prior quarter and dropped by 18 points year-over-year. The drop was almost entirely due to how investors view current market conditions. Only 26% of investors believe market conditions are better than they were a year ago, the lowest share on record, while 45% of respondents believe market conditions have worsened, the highest percentage recorded in the history of the survey. Investors were more positive in their responses to the other metrics analyzed in the survey – the outlook for future market conditions, home price trends, and plans for property purchases – suggesting at least some optimism going forward.
“Investors, both fix-and-flip and rental property investors, clearly feel that market conditions today have become more and more difficult,” said RCN Capital CEO, Jeffrey Tesch. “In addition to the ongoing conflict in Iran, rising finance costs, limited inventory, escalating home and renovation costs and downward pressure on rental rates are all contributing factors for their increased pessimism.”
According to the Summer 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, fell to just under 26% from 35% in the Spring 2026 survey. Those who viewed the market today as being worse rose from 36% to 45%. On the other hand, 34% of the investors believe that conditions will improve over the next six months, up from 32% in the previous survey; and the number expecting conditions to worsen fell from 32% to 27%.
The Investor Sentiment Index fell for the second consecutive quarter after having plateaued for two quarters at a score of 101. This quarter’s score of 84 was the lowest index number in the 12 quarters reported and marks the first time when the Index reported scores below 90 in consecutive quarters.
“Real estate investor sentiment appears to be impacting investor purchase activity,” said Rick Sharga, CJ Patrick Company CEO. “Real estate investors purchased 23% fewer homes in the first quarter of 2026 than they did in the previous quarter and in the first quarter of 2025. The survey also shows that 32% of the respondents don’t plan to buy any properties at all this year, and only 9% plan to buy more than they did a year ago.”
Many Investors Finance Purchases, So Lending Costs are Critical
Investors responding to this survey mostly finance their property purchases – just under 28% 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 one of the major challenges faced by investors in today’s market: almost 55% of respondents claimed this was one of the biggest problems in today’s market. And almost three-quarters of the investors surveyed (73%) don’t expect to see relief anytime soon, anticipating that interest rates will either stay where they are today or increase between now and the end of the year.
Investor Buying Plans Mostly Status Quo
Buying plans reported by investors were similar to previous surveys, with a few notable differences. The number of investors who plan to make no purchases in 2026 fell two points, from 34% of respondents to 32%. Over 55% plan to buy between 1-5 properties, up from 41% in the Spring; 10% plan to buy between 6-10, down from 19.7%; and just 3% will buy 11 or more properties, down from 5.3% last quarter.
For the majority of investors (55%), this is about the same number of properties they purchased in the last 12 months. Only 9% plan to buy more properties than last year, up from 7% last quarter; while about 36% plan to buy fewer, down marginally from 37% in the prior quarter.
Although both fix-and-flip and rental property investors had more pessimistic outlooks than they did last quarter, with lower scores for improving conditions and higher scores for deteriorating conditions, flippers had a much brighter view of the future market, with 44% expecting improved conditions and 27% expecting things to deteriorate. Rental investors seemed to expect the status quo, with 46% expecting market conditions to remain the same, while almost equal numbers expected better conditions (26%) or worse conditions (28%).
Insurance Challenges Continue to be a Concern for Real Estate Investors
Insurance costs and limited availability continue to plague real estate investors. Nearly 71% of the respondents said that insurance issues were a factor in their investment decision-making, and 50% said insurance-related factors had caused them to miss out on a deal.
While flippers have been more concerned about insurance issues in previous surveys, their views were remarkably similar to rental property investors in the Summer survey: seventy percent of both groups said insurance costs and availability were factors in their decision-making; 51% of flippers said they’d missed out on a deal because of insurance issues compared to 49% of rental investors.
More Investors Expect Home Prices to Rise
Perhaps due to today’s more constrained inventory of homes for sale, investors reversed course and now expect home prices to rise by the end of the year. Over 60% of the respondents said they anticipate higher home prices over the next six months. This was a significant change in direction, as fewer investors had forecast rising prices in each of the three previous quarters: just under 52% in the Spring survey, over 57% of the investors surveyed in the Winter, and 62% in the Fall. The number of investors expecting price declines has been more consistent, at 13% in the most recent report, and 15% last quarter. Investor sentiment here is largely in keeping with national home price trends, with prices rising in about two-thirds of the 300 largest metro markets over the past year.
Immigration and Tariff Policies Having Different Impacts
The impact of Trump Administration immigration and tariff policies differs, according to survey respondents. Over 50% of the respondents said that immigration policies had little or no impact on their investing – up from 42% last quarter. Among the investors who claimed that the Administration’s immigration policy had a negative impact on their business, 32% said made it harder for them to find and keep skilled workers, down four points from last quarter. And about 29% said these policies had increased their labor costs, down from 35% in the previous survey. Fix-and-flip investors appear to have more concerns about these policies than rental investors: about 30% of flippers said labor issues were more difficult compared to 19% of rental investors; and more flippers cited increased costs (24% vs. 21%).
In contrast, about 70% of investors felt that tariffs had a negative impact on their investing. About 48% of respondents said tariffs had resulted in higher prices on products and materials, up from 44% last quarter; 26% said they’d seen a reduction in their net margins, down four points from the last survey; and 26% said they’d noticed a disruption in supply chains, also down four points from the last survey.
Rising Home Prices, Rising Material Costs, and Limited Inventory Major Challenges
The major challenges cited most often by investors in the Spring survey were similar to those noted in prior reports. The high cost of financing, as noted above, was cited most often, by just under 55% of the investors. Rising home prices was noted by 48% of respondents, a huge 15-point jump from the prior quarter, perhaps reflecting a shift in direction for home prices nationally. Other frequently mentioned challenges included lack of inventory (29%), and rising material and product costs (34%).
Looking ahead, about 23% of investors expressed concerns about rising insurance premiums or limited availability of insurance; and about 20% were concerned about their availability to secure a loan.
To download the full version of the Summer 2026 Investor Sentiment Survey, click here or on the image below:
FAQs:
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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:
- Current Market Outlook - How does the environment for residential real estate investing compare to one year ago?
- Future Market Outlook - What’s your outlook for residential real estate investing over the next 6 months compared to today?
- Expected Home Price Increases - What do you expect home prices to do over the next 6 months?
- Number of Properties Compared to Past 12 Months - How does the number of properties you plan to invest in over the next 12 months compare to the number of properties you’ve invested in over the past 12 months?
More detailed methodology available upon request.
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Q: Why did real estate investor sentiment decline in Summer 2026?
A: Investors cited several challenges, including high financing costs, limited housing inventory, rising home prices, increasing renovation and material costs, insurance concerns, and geopolitical uncertainty related to the conflict in Iran.
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Q: How do investors view current market conditions?
A: Only 26% of investors believe current market conditions are better than they were a year ago, while 45% believe conditions have worsened, the highest negative reading recorded by the survey.
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Q: Are investors optimistic about the future despite current challenges?
A: Some of them, yes. While most investors are negative about current conditions, 34% expect market conditions to improve over the next six months, and fewer investors expect conditions to worsen than in the prior quarter.
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Q: How are high interest rates affecting real estate investors?
A: Financing costs remain the most frequently cited challenge, with nearly 55% of investors identifying them as a major concern. Additionally, 73% expect interest rates to remain elevated or increase through the end of the year.
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Q: Are investors still planning to purchase properties in 2026?
A: Most investors remain active. More than 55% plan to purchase between one and five properties this year, although 32% say they do not plan to buy any investment properties in 2026.
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Q: How has investor purchasing activity changed?
A: Investor purchases declined significantly in early 2026. According to the survey, investors bought 23% fewer homes in the first quarter of 2026 compared to both the previous quarter and the same period one year earlier.
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Q: What role do insurance costs play in investment decisions?
A: Insurance costs and availability remain major concerns. Nearly 71% of investors say insurance issues affect their investment decisions, and 50% report missing out on a deal because of insurance-related challenges.
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Q: Do investors expect home prices to rise or fall?
A: Most investors expect home prices to increase. More than 60% anticipate home prices will rise over the next six months, while only 13% expect prices to decline.
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Q: How are tariffs impacting real estate investors?
A: About 70% of investors believe tariffs negatively affect their business. The most common impacts include higher material and product costs, lower profit margins, and supply chain disruptions.
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Q: How are immigration policies affecting real estate investors?
A: More than half of investors report little or no impact from immigration policy changes. However, some investors, particularly fix-and-flip operators, cite labor shortages and rising labor costs as challenges.
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Q: What are the biggest challenges facing real estate investors in 2026?
A: The most commonly cited challenges are high financing costs, rising home prices, increasing material costs, limited inventory, insurance-related issues, and concerns about securing financing.
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
Rick Sharga
CJ Patrick Company