Higher financing costs, as well as limited demand due to the deteriorating affordability of homebuyers and renters, are among the factors contributing to the weak sentiment among investors.

South Windsor, Connecticut, October 22nd / PRNewswire / -- According to the 2026 Autumn RCN Capital / CJ Patrick Company Investor Sentiment Index ( ISI )™, real estate investor sentiment has slightly improved after two consecutive quarters of decline, rising from a record low of 84 to 89. The index has been below 90 for the third consecutive quarter, 12 points lower than the same period last year.

There seem to be two factors worth noting that are affecting investor sentiment. The first is the Iran war; nearly 60% of investors believe that this conflict has had a negative impact on the real estate market. Approximately 40% of respondents mentioned that the conflict has led to rising energy costs and increased inflation, which they believe has affected profitability and reduced the demand from potential homebuyers and renters.

Investors are also uneasy about the Federal Reserve's recent move to raise the federal funds rate. More than 50% of respondents agreed that this will increase borrowing costs, raise financing expenses, and squeeze profit margins. The market is also concerned that higher interest rates are already reflected in mortgage rates rising to 7.5%, which will further weaken the affordability of potential homebuyers and put greater financial pressure on families considering renting.

RCN Capital CEO Jeffrey Tesch stated: "Investor sentiment has always been closely linked to investment activities – industry reports show that the volume of homes purchased by investors in the first two quarters of 2026 has decreased by 22% compared to the same period last year. We hope that the improvement in prospects seen in our autumn survey will mean that investors will once again play a crucial role in helping to stabilize the housing market, which currently faces a shortage of traditional homebuyers."

According to the RCN Capital Investor Sentiment Survey™ for the fall of 2026, the proportion of investors who believe the current market is better or much better than it was a year ago has risen from just under 26% in the summer to 37%, the highest level in three quarters. The proportion of investors who think the current market is worse has decreased from 44% to 38%. Similarly, 39% of investors believe that market conditions will improve in the next six months, which is higher than the 36% in the previous survey; however, the number of those expecting conditions to deteriorate remains unchanged at 30%.

CJ Patrick Company CEO Rick Sharga stated: "Real estate investors are already facing a challenging market environment – relatively high financing costs, limited inventory, rising housing prices, and weak demand. However, the impact of the Iran war – higher inflation, higher fuel prices, and even higher borrowing costs – has dampened investor sentiment, aligning it with that of consumers and builders, both of whom are at or near historical lows."

Many investors purchase homes through financing, therefore the cost of borrowing is of paramount importance.

Most of the investors participating in the survey purchased properties through financing – slightly less than 20% indicated they bought properties with cash – therefore high financing costs continue to constitute a major obstacle. Investors use a variety of loan types to purchase properties, including bridge loans, DSCR loans for renting out properties, as well as traditional loans (usually 30-year fixed-rate loans). Among investors who rent out properties, slightly over half use traditional financing after the tenants move in.

Not surprisingly, high financing costs are still regarded as the biggest challenge faced by investors in the current market: over 70% of respondents cited this as one of the most serious issues at present. Nearly half of the investors surveyed (45%) do not expect any relief in the short term and believe that interest rates will remain above 7% from now until the end of the year.

Investors' housing purchase plans remain largely unchanged.

The respondents in the autumn survey have slightly different housing purchase plans compared to those in the summer. Approximately 36% plan to buy 1 to 5 properties, which is a significant decrease from 55% in the summer; on the other hand, 26% plan to buy 6 to 10 properties, a substantial increase from 10% in the previous quarter; the proportion of those planning to buy 11 or more properties has also doubled, rising from 3% to 6%. The percentage of investors who plan not to make any purchases in 2026 has decreased by 2 percentage points, from 32% to 30%.

For the majority of investors (50%), this is roughly the same as the number of properties they purchased in the past 12 months. Only 7% plan to buy more properties than last year, which is lower than the 9% from the previous quarter; whereas about 43% plan to buy fewer, an increase from 36% in the previous quarter.

From a market perspective, the differences between investors in rental properties and those in renovating and reselling properties are quite evident. In the latest survey, only 13% of rental property investors expect market conditions to improve, while over 50% anticipate them to worsen. The sentiment among investors in renovating and reselling properties is almost the opposite; over 56% believe that conditions will improve, with only 17% concerned that the situation will become more unfavorable in the coming months.

Insurance issues continue to plague real estate investors

Insurance costs and limited insurance availability continue to be a concern for real estate investors. Nearly 80% of respondents stated that insurance issues are a factor in their investment decisions, and 63% said that insurance-related factors have caused them to miss out on transactions. Both of these figures are more than 10 percentage points higher than in the previous survey.

There are also significant differences in views on insurance issues between investors in property renovation and resale, and those who rent out properties: nearly 90% of renovation and resale investors say that insurance is a part of their decision-making process, compared to 69% of property rental investors. Renovation and resale investors also experience more missed transactions, at a rate of 73%, which is higher than the 50% for property rental investors.

Most investors expect housing prices to rise.

Despite higher mortgage rates, nearly two-thirds of the investors surveyed expect housing prices to rise by the end of this year. Over 66% of respondents indicated that they anticipate housing prices to increase in the next six months. Nearly 43% of respondents expect the increase to exceed 5%, which is significantly higher than the housing price increases seen so far this year. On the other hand, the proportion of investors expecting housing prices to fall has decreased by 2 percentage points, from 13% in the previous quarter to 11%.

Immigration and tariff policies are having an impact.

Over 48% of respondents stated that immigration policies have made it more difficult for them to find and retain skilled workers, an increase of 16 percentage points from the previous quarter. The proportion of investors who believe that immigration policies have increased their construction costs has risen from 29% to over 36%. Meanwhile, the proportion of those who think these policies have little or no impact has decreased from 50% to just under 38%.

Tariffs continue to be unpopular among investors: over 62% of investors believe that tariffs have led to increased prices of products and materials, up from 48% in the previous quarter; 28% reported a decline in net profit margins, an increase of 2 percentage points; 26% noted disruptions in the supply chain, also up by 6 percentage points from 26% to over 32%. Only 25% of investors believe that tariffs have no impact on their business, down from 30% in the previous quarter.

Rising housing prices, increasing material costs, and limited inventory remain the main challenges.

The main challenges mentioned most frequently by investors in the autumn survey are similar to those reported in previous surveys. However, higher interest rates have led to a significant increase in the proportion of investors concerned about high financing costs, rising from 55% to over 70%. 38% of respondents cited rising housing prices, which is a decrease of 10 percentage points compared to the previous quarter. Other frequently mentioned challenges include insufficient inventory (31%) and increasing costs of materials and products (23%).

About RCN Capital

RCN Capital is a national direct private lending institution headquartered in South Windsor, Connecticut. The company was established in 2010 and provides investment loans for the purchase or refinance of non-residential properties. It specializes in financing new construction projects, short-term renovation and resale, as well as bridge financing, and also offers long-term leasing financing for real estate investors. For more information about RCN Capital and its lending programs, please visit www.RCNCapital.com.

About CJ Patrick Company

CJ Patrick Company was established in 2019 and is an organization that provides market intelligence and business consulting services to companies in the real estate and mortgage lending industries. For more information, please visit www.cjpatrick.com.

Regarding RCN Capital / CJ Patrick Investor Sentiment Index ™ ( ISI )

RCN Capital / CJ Patrick Investor Sentiment Index ™ ( ISI ) aims to track the sentiment of real estate investors across the United States and measure market prospects. The index is based on quarterly surveys of residential real estate investors, focusing on their responses to four specific questions:

• Current Market Prospects – How does the investment environment for residential real estate compare to that of a year ago?
• Future Market Prospects – How does the investment prospect for residential real estate look in the next 6 months compared to the current situation?
• Expected housing price increase – How do you expect housing prices to change in the next 6 months?
• Number of properties compared to the past 12 months – How does the number of properties you plan to invest in over the next 12 months compare to that of the past 12 months?