The Fall 2026 RCN Capital Investor Sentiment Survey reveals a modest improvement in real estate investor sentiment, rising to 89 from an all-time low of 84 in the previous quarter. Despite this uptick, the index remains 12 points lower than a year ago, reflecting ongoing challenges in the market. Nearly 60% of investors cite the war in Iran as a negative influence, with 40% pointing to higher energy costs and inflation as key concerns.
The Federal Reserve's recent rate hike is another major factor weighing on investor outlook. Over 50% of respondents expect higher borrowing costs to reduce profitability, while mortgage rates have already climbed to 7.5%. This rise in interest rates is expected to further strain affordability for homebuyers and renters, exacerbating existing market pressures.
Investor activity has been subdued, with home purchases down 22% in the first two quarters of 2026 compared to the previous year. However, there are signs of cautious optimism: 37% of investors now view the market as better than a year ago, up from 26% in the summer. Additionally, 39% believe conditions will improve over the next six months, though 30% remain pessimistic.
Financing costs remain a significant hurdle, with over 70% of investors identifying them as a major challenge. Insurance issues are also a growing concern, with nearly 80% of respondents factoring them into their investment decisions. Despite these challenges, two-thirds of investors expect home prices to rise by the end of the year, with 43% anticipating increases higher than 5%.