Fix-and-flip and rental investors post a record-low sentiment score as mortgage rates surge and Iran conflict costs mount
Real estate investor confidence in the single-family market has dropped to an all-time low. Forty-five percent of respondents to a quarterly industry survey said conditions have worsened, the highest negative reading in the index's three-year history.
The RCN Capital/CJ Patrick Company Investor Sentiment Index (ISI) fell for a second consecutive quarter in June, registering a score of 84. That's down 3 points from Q1 2026 and 18 points below the same period in 2025, according to the quarterly survey of more than 300 fix-and-flip and rental property investors.
A record share of investors see conditions worsening
Only 26% of respondents said they believe the market is performing better than it was a year ago, the lowest reading since the survey launched in 2023 and a retreat from 35% in Q1 2026.
Jeffrey Tesch, chief executive officer of RCN Capital, a private lender to real estate investors, attributed the deterioration to interlocking pressures.
"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," Tesch said.
Mortgage rates fell to a recent low at the end of February before rising after the outbreak of the Iran conflict, and now stand at their highest level in over a year.
More than half of survey respondents said high financing costs represent "one of the biggest problems in today's market," and three-quarters said they do not expect near-term rate relief.
As investor home purchases fell to their lowest since the pandemic in Q1 2026, the ISI's second consecutive decline signals the contraction is deepening. The Iran conflict rattled investor confidence in Q1 2026 when the index slid to 87, then also a record low.
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Purchase activity retreats sharply across the board
The sentiment decline carries through to deal volume. Rick Sharga, chief executive officer of the CJ Patrick Company, said activity fell materially in early 2026.
"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," Sharga said.
Some forward-looking signals offer limited optimism. The share of investors expecting conditions to improve over the next six months rose to 34% from 32%, while those forecasting further decline fell from 32% to 27%.
Home price expectations also firmed. More than 60% now expect prices to rise over the next six months, up from just under 52% in Q1 2026.
The survey focuses on small to mid-sized investors — distinct from the large institutional buyers now subject to the 21st Century ROAD to Housing Act, which became law on July 11, and bars investors controlling 350 or more single-family homes from acquiring additional properties.
With mortgage rates expected to remain elevated through the rest of 2026, the path forward for smaller investors remains constrained. Of those surveyed, 28% reported paying cash for recent purchases, a growing sign that some are sidestepping credit markets entirely to stay active.
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