Real estate investors have a ‘cautiously optimistic’ outlook: survey


Single-family rental (SFR) investors are worried about the rising cost of home insurance, but the majority expect to buy more properties in the next year as mortgage rates cool and home-price growth subsides.

That’s the conclusion from a survey of 235 single-family landlords in late June and early July. The data was released this week by media and research company ResiClub in conjunction with Florida-based private lender LendingOne.

The survey of investors who own at least one SFR property showed that 60% of respondents are likely to buy again in the next 12 months, while 39% plan to sell at least one property. The vast majority (86%) of SFR investors expect interest rates to decline in the next year, although only 10% anticipate a decline of more than 1 percentage point.

The findings suggest a “cautiously optimistic“ mindset among investors and expectations of a “balanced single-family rental market over the next 12 months.“ Still, renters should expect housing costs to rise as three in four landlords plan to raise rents in the next year, including one-third who plan to increase them by more than 4%.

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This is due in part to skyrocketing insurance costs in many parts of the country. Half of the respondents to the survey indicated that insurance was the expense that increased the most over the past year.

Insurance marketplace Matic recently reported that annual insurance premiums rose by as much as $865 for homeowners who originally purchased their policies in 2021. S&P Global found that U.S. home insurance rates jumped 11.3% in 2023, with costs in Texas, Arizona and Utah rising at roughly double that pace.

“The survey result generally aligns with what we have heard and thought over the last 12 months and how we see this shaking out,“ LendingOne CEO Matthew Neisser said in the report.

“We saw apartment rents starting to stall months ago; apartment rents were already leveling out in most markets and becoming more competitive with concessions. So, on the single-family side, it’s a function of affordability. And people can afford only so much at certain price points. So it seemed obvious there’s only so much more to run on rents, within reason.”

CoreLogic data shows that annualized single-family rent growth reached a 2024 peak of 3.2% in May. Some of the country’s largest markets — including Seattle, New York City, San Francisco and Chicago — were well above that pace, while St. Louis led the nation’s 20 largest markets for a second month in a row at 6.2% growth.

Recent survey data from online investment property marketplace New Western found that small mom-and-pop investors are growing their share of business at the same time that large institutional players are pulling back. Ninety percent of survey respondents expect their businesses to grow in 2024.

“Even with the interest rates where they are today, there’s still an overwhelming amount of demand for the supply that we have — and mainly for this affordable inventory,” New Western President Kurt Carlton told HousingWire. “Since it can’t be delivered by the builders, these small investors are really filling that gap by finding this vacant inventory.”

Observations from the ResiClub/LendingOne survey dovetail with these remarks.

“Inventory reached unprecedented lows during and after the COVID-19 pandemic, making it challenging for investors to acquire properties and expand their portfolios due to fierce buyer competition,“ Neisser said. “However, as the market stabilizes, we anticipate increased buying opportunities for our clients. It’s important to note that significant rent appreciation is less likely in the current climate. Investors should base their purchasing decisions on realistic expectations.“



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