This was the main finding of the Summer 2024 Investor Sentiment Survey, released Wednesday by Connecticut-based mortgage lender RCN Capital and conducted by business advisory firm CJ Patrick Co. The survey’s sentiment index is designed to track the outlook of real estate investors across the country.

Despite numerous challenges, real estate investors feel much better about the investing environment today than they have over the past year and are equally optimistic about where the market is heading. Rental property investors are slightly less positive than fix-and-flip investors, which may be due to rental prices flattening and even declining in many markets.

The survey revealed that 60% of investors view today’s market as “better or much better” compared to this time last year, while 20% view it as “worse or much worse.”

Looking ahead, 61% of respondents expect the market to continue improving, while 14% expect it to decline. These are the highest positive and lowest negative responses recorded in the five iterations of the quarterly survey.

However, there is a significant difference in sentiment between short-term fix-and-flip investors and long-term buy-and-hold investors.

Home flippers were overwhelmingly positive, with 73% reporting better conditions today compared to a year ago. Additionally, 75% of flippers expect conditions to keep improving. Among long-term investors, these figures drop to 35% and 37%.

Interestingly, despite their optimism about the real estate market, 75% of fix-and-flip investors believe the U.S. will enter a recession this year, compared to only 35% of long-term investors.

Most investors seem to be mitigating risk by investing locally, with 92% of flippers and 86% of long-term investors planning to continue investing primarily in their home states.

Recent reports of increased flipping activity and improvements in flippers’ gross margins may be fueling some of the optimism among those investors. Meanwhile, flat and declining rent rates, an influx of new apartments, and rising property acquisition costs may be dimming the outlook for some rental property investors.

Additionally, more than 80% of investors said that rising insurance costs or lack of insurance options in some markets, particularly those prone to frequent weather events, are affecting their decisions to buy or sell homes. Nearly 70% stated that insurance issues had stopped an investment deal, both findings significantly higher than in the first-quarter 2024 survey.

While short-term fix-and-flip investors exhibit strong confidence in market conditions and future prospects, long-term buy-and-hold investors remain cautious due to factors like flat rental prices and increased property acquisition costs. This nuanced sentiment underscores the varying perspectives within the real estate investment community as they navigate an evolving market landscape. As investors continue to adapt their strategies, local investments remain a common approach to mitigate risks and capitalize on emerging opportunities.