Real Estate Investor Sentiment Rebounds Amid Improving Market Conditions

By James, Admin
August 14, 2025 – 4:15 PM CST, Chicago, IL

Investor confidence in the residential real estate market has staged a significant rebound this summer, according to the latest RCN Capital/CJ Patrick Company Investor Sentiment Index™. After hitting a two-year low of 88 in the spring, the index has now moved upward, signaling renewed optimism among property buyers.

This rebound comes after months of cautious sentiment caused by high mortgage rates and inventory shortages. The recent uptick reflects a shift in market dynamics, with several indicators suggesting that conditions are beginning to favor investors.

RCN Capital CEO Jeffrey Tesch drew parallels to consumer sentiment trends, noting that both metrics hit multi-year lows in April but have been recovering since then. He attributed the rebound to rising inventory—up 30% from a year earlier—and slowing home price appreciation, which improves overall affordability.

Indeed, investor sentiment toward the current housing market has strengthened. The share of respondents saying conditions are “better” or “much better” than a year ago jumped to 48%, up from 31% in the spring. Simultaneously, those rating conditions as “unchanged” or “worse” both declined.

Looking ahead, nearly half of investors—49%—expect market conditions to improve further over the next six months. Meanwhile, 30% foresee stability, and only 20% anticipate a downturn. This forward-looking optimism underlines investor expectations that current improvements are sustainable.

The rebound extends across different types of investors. Fix-and-flip buyers are notably more bullish, with 53% saying conditions have improved over the past year, compared to just 33% of rental property investors—a marked increase from the previous survey.

When it comes to expectations for home prices, 59% of all respondents believe they’ll rise in the year ahead. Among flippers, that number rises to 65%, while 50% of rental investors share this expectation. Notably, nearly three-quarters anticipate that price growth will slow to under 5%, or that it could stall altogether.

Yet, the market remains rooted in realism. Around 25% of investors report having already reduced asking rents or sales prices to adapt. Another 23% have cut back on new investments, and 26% expect to make concessions within six months.

Investment activity appears measured—26% of respondents plan to make no purchases in the coming year. Meanwhile, 46% plan to acquire up to five properties, 23% intend to invest in six to ten, and just 6% anticipate buying more than eleven.

Despite improving sentiment, economic concerns remain prominent. Nearly 57% of investors anticipate a U.S. recession within the next year. Still, worries about tariffs under the current administration and supply chain disruptions have eased compared to earlier in the year.

This optimism comes against a backdrop of rising housing inventory and reduced price pressures, which together are easing entry points for investors. Still, many expect the shift to be gradual rather than explosive.

On a broader note, the commercial real estate (CRE) finance sector is also seeing a turnaround. The CRE Finance Council’s 2Q 2025 Sentiment Index surged to 112.3 from 87.9 in the prior quarter—marking one of the strongest quarterly rebounds in its history.

This dramatic recovery sweep across investor sentiment speaks to a shift in optimism that transcends residential markets. CRE finance professionals now view economic conditions more favorably, with fewer expecting deterioration and more anticipating stable or improving conditions.

Federal policy expectations have also improved. Whereas only 11% saw policy as favorable in the prior quarter, 49% now view it positively. Sentiment toward interest-rate adjustments has followed suit, with more participants now believing that the rate outlook will be advantageous.

Altogether, the data suggests that real estate investors—both residential and commercial—are gaining confidence in the direction of the market. Borrower demand, fundamentals, and policy outlooks are all contributing to the renewed optimism.

However, challenges persist. Among residential investors, the caution reflected in modest acquisition plans and preparation for concessions underscores that concerns about recession, rates, and market volatility remain alive.