WAR IN IRAN DIMINISHES REAL ESTATE INVESTOR OPTIMISM ACCORDING TO SPRING 2026 RCN CAPITAL INVESTOR SENTIMENT SURVEY

Investor Sentiment Index Drops 14 Points, Recording Lowest Score in Three Years. Investor Ban on Home Purchases Viewed as a Non-Issue

Real estate investor sentiment fell by 14 points in the first quarter of 2026 according to the Spring 2026 RCN Capital/CJ Patrick Company Investor Sentiment Index (ISI)™. The index score of 87 was the lowest score recorded in the 11-quarter history of the report, and represented the first time that all four elements analyzed in the index – current market conditions, outlook for future market conditions, home price trends, and plans for property purchases – declined quarter-over-quarter.

“Investor sentiment was clearly affected by the war in Iran,” said RCN Capital CEO, Jeffrey Tesch. “Almost 60% of the investors surveyed believed that the war would have a negative impact on the housing market, and on their business, and this reversed the positive outlook investors had expressed about 2026 in last quarter’s sentiment index.”

According to the Spring 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 36% from 45% in the Winter 2025 survey. Those who viewed the market today as being worse rose from 25% to 36%. Even fewer investors, 32%,expect market conditions to improve, down from 44% last quarter. The number expecting conditions to worsen jumped from 19% to 32%.

The Investor Sentiment Index fell after having plateaued for two quarters at a score of 101. This quarter’s score of 87 was the lowest index number in the 11 quarters reported, but just one point lower than last Spring’s score of 88. While seasonality might be a consideration, the Spring 2024 score of 100 suggests otherwise.

“Real estate investor sentiment is in line with consumer sentiment, which recorded the lowest numbers on record in April, and homebuilder sentiment, which fell four points in April to record its lowest score in 14 years,” said Rick Sharga, CJ Patrick Company CEO. “Based on our survey results, the war in Iran is clearly having an impact on investor outlook, but the lackluster performance of home sales in the first quarter is also likely a contributing factor.”

Institutional Investor Ban not a Major Concern

The ban on home purchases by large institutional investors included in the Senate’s 21^st Century Road to Housing bill was not a big concern for survey respondents. Over 46% of the respondents identify themselves as smaller investors, and don’t believe the bill will impact them one way or the other. Another 25% are smaller investors who believe the ban will reduce competition and make it easier for them to invest. Larger investors were split on the impact of the legislation, with roughly twice as many saying the ban will make it harder for them to continue to invest, with a smaller number responding that they’ll find some way to continue to purchase properties.

One-Third of Investors Plan to Stay on the Sidelines in 2026

Despite the large drop in the sentiment score, there was no increase in the number of investors who plan to make no purchases in 2026: 34% of respondents said they planned to buy no properties in the next 12 months, exactly the same percentage as in the previous survey. Over 41% plan to buy between 1-5 properties, 19.7% between 6-10, and 5.3% will buy 11 or more properties.

For the majority of investors (56%), 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 12% last quarter; while about 37% plan to buy fewer, up from 34% 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 were considerably more optimistic than rental property investors. Over 44% of flippers expected conditions to improve later in 2026; 23.6% felt they’d stay the same; and under 32% felt things would be worse. In contrast, only 23% of rental property investors expected improvements; 41% expected the status quo; and over 36% believed that conditions would worsen.

Insurance Challenges a Growing Concern for Real Estate Investors

Insurance costs and limited availability continue to weigh heavily on real estate investors. Nearly 75% of the respondents said that insurance issues were a factor in their investment decision-making, and over 53% said insurance-related factors had caused them to miss out on a deal.

The topic appears to be more top of mind for flippers, with almost 80% of them acknowledging it as a factor in their investment decision-making, compared to 65% of rental investors. This could be because insurance issues appear to have caused far more missed opportunities among flippers than rental investors, with 65% of the former saying they’ve missed out on a deal, compared to just 39% of the latter.

In markets hardest hit by extreme weather events over the past few years – Florida and California – the responses were a bit more extreme. In California, 100% of flippers and 71% of rental investors factor insurance into their investment decisions. In Florida, 88% of flippers and 67% of rental investors do likewise. Some 85% of California flippers and 65% of Florida flippers have missed out on an investment opportunity due to insurance costs or unavailability, while the same is true to a lesser degree among rental property investors, with 33% of California respondents and 42% of Florida investors noting this.

Fewer Investors Expect Home Prices to Rise

For the third consecutive quarter, fewer investors believe that home prices will rise in the months ahead. Just under 52% of respondents believe that price hikes will continue, compared to over 57% of the investors surveyed last quarter, and 62% in the quarter before that. The number of investors expecting price declines has been more consistent, at 15% in the most recent report, and 16% last quarter. Investor sentiment here is largely in keeping with national home price trends, as recent reports from the FHFA, NAR, and Case Shiller have all cited annual home price increases of less than two percent.

On the other hand, just over 30% of investors expect mortgage rates to rise above 7% in 2026, up from last quarter’s 23%. About 42% expect rates to stay roughly where they are, in line with last quarter’s 44%. But there’s slightly more optimism about finance costs this quarter, as the number of respondents expecting rates to dip below 6% again rose by two points, from 6 to 8%.

These rates play an important role in investors’ markets: about 23% of respondents to the Spring survey said rising rates had resulted in a decline for owner-occupied homes; another 23% reported an increased demand for rental properties – probably from prospective homebuyers who couldn’t afford to finance the purchase of a home. Some 27% said they’d seen both of these trends in their markets, while almost 11% said they’d seen demand for both owner-occupied homes and rental decline since rates went up.

Immigration and Tariff Policies Still Having an Impact

The impact of Trump Administration immigration and tariff policies, while still significant, appears to have plateaued. Over 36% of the respondents said that immigration policies had made it harder for them to find and keep skilled workers, down one point from last quarter and 10 points from the quarter before that. About 35% said these policies had increased their labor costs, and the number of investors who said their sales or rental opportunities had declined was flat at 21%. Similarly, there was little change in the number of investors who said these policies have had no impact on their business, dropping from 43% to 42%.

Responses regarding tariffs followed a similar pattern. About 44% of respondents said tariffs had resulted in higher prices on products and materials, down from 45% last quarter; 30% said they’d seen a reduction in their net margins, down four points from the last survey; just under 30% said they’d noticed a disruption in supply chains, the same as in the Winter survey; and the number of investors who said they’d seen no impact on their business barely rose from 29% to 30%.

High Cost of Financing, Rising Home Prices, and Limited Inventory Still Biggest 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 was cited most often, by just under 55% of the investors, followed by rising home prices (33%), competition from other investors (32%), lack of inventory (31%), and rising material and product costs (30%). Responses to this quarter’s survey do suggest that financing costs may be improving, and that investors expect the improvement to continue. While the high cost of financing was cited most often as a major challenge investors expect to have six months from now, the percent of times it was mentioned dipped to 48% – down eight points from current market conditions and three points from the prior quarter.

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.

About the RCN Capital/CJ Patrick Investor Sentiment Index™ (ISI) 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 is available upon request.

SOURCE RCN Capital