Investors pulled back as geopolitics, rates and insurance risks squeezed returns
Real estate investors entered 2026 in a far darker mood, with fresh geopolitical turmoil, stubborn borrowing costs and rising insurance risks weighing on confidence and deal flow, according to new research from RCN Capital and consulting firm CJ Patrick Company.
The Spring 2026 RCN Capital/CJ Patrick Investor Sentiment Index (ISI) fell 14 points in the first quarter to 87, marking its lowest reading in the survey’s 11‑quarter history.
It was also the first time all four components – current conditions, outlook, home prices and purchase plans – declined quarter over quarter.
War in Iran fed anxiety already building in housing
“Investor sentiment was clearly affected by the war in Iran,” RCN Capital chief executive Jeffrey Tesch said.
“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.”
Compared with the Winter 2025 survey, the share of investors who saw today’s market as better than a year ago dropped to 36% from 45%, while those who viewed it as worse climbed from 25% to 36%.
Only 32% expect conditions to improve, down from 44%, and the share expecting deterioration jumped from 19% to 32%.
“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,” CJ Patrick chief executive Rick Sharga said.
He added that “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.”
Investors kept buying, but shifted risk calculus
Despite the weaker mood, 34% of respondents said they plan to make no purchases in the next 12 months – unchanged from the prior survey.
More than 41% plan to buy one to five properties, about 20% expect to buy six to 10, and just over 5% plan to acquire 11 or more.
Flippers remained more upbeat than rental investors: over 44% expect conditions to improve later in 2026, while under 32% think they would worsen.
In contrast, only 23% of rental property investors anticipate better conditions; more than a third expect things to get worse.
Insurance emerged as a critical constraint. Nearly 75% of investors said insurance costs or availability factored into their decisions, and more than 53% said they had lost at least one deal because they could not make the numbers work.
In California and Florida – both hit by extreme weather and carrier withdrawals – majorities of investors reported walking away from opportunities due to insurance issues.
Policy shifts and rate path keep uncertainty elevated
Policy risk also featured in the findings, but in nuanced ways.
The proposed Senate ban on home purchases by large institutional buyers in the 21st Century Road to Housing bill registered as a “non‑issue” for many: about 46% of respondents identified as smaller investors who do not expect any impact, while another 25% believe a ban would reduce competition and help them.
Larger investors were split, with roughly twice as many saying the measure would make it harder to deploy capital as those who believe they would find workarounds.
Immigration and tariff policy effects appeared to have plateaued. Just over 36% of investors said tighter immigration rules made it harder to find and keep skilled workers and about 35% reported higher labor costs, while 44% said tariffs pushed up material prices and around 30% reported lower net margins.
On pricing, fewer investors expect home values to climb. Just under 52% believe prices would keep rising, down from about 57% last quarter and 62% the quarter before.
Around 15% expect declines, roughly in line with prior surveys – consistent with Federal Housing Finance Agency data and other national benchmarks showing house‑price growth running below 2% year over year.
Expectations for mortgage rates remain divided. Just over 30% of investors think rates would rise above 7% in 2026, about 42% expect them to stay near current levels, and a small but growing minority – 8%, up from 6% – expect them to fall below 6%.
Roughly a quarter of respondents said higher rates cooled owner‑occupied demand in their markets, another quarter reported stronger rental demand as would‑be buyers stayed renters longer, and more than a quarter saw both trends at once.
High financing costs, rising prices and thin inventory continued to dominate investor concerns.
Nearly 55% cited the cost of capital as their top challenge, followed by rising home prices (33%), competition from other investors (32%), low inventory (31%) and higher material costs (30%).
Looking six months ahead, fewer investors – 48% – expect financing costs to remain their primary headache, suggesting a cautious hope that rate pressure might ease even as geopolitical risk and insurance uncertainty linger.
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