In this Monthly Market Trends series, we offer you our interpretation of current trends through the eyes of our VP of Market Risk, Patrick Donoghue, and provide you with his balanced commentary so you can make the best investment decisions today for the highest returns tomorrow.

We're also excited to announce our Weekly Market Trends podcast hosted by Patrick, with new episodes releasing every Monday. Take a listen to our first one here!

Summary and Analysis of the Housing Investor Survey

Groundfloor recently sponsored a comprehensive Housing Investor Survey conducted by Resiclub. 224 investors, who own short-term or long-term single-family homes, condos, or townhome rental properties, participated in the survey. The results offer insights into the mindset of residential housing investors, particularly those using Groundfloor financing for their projects.

Key Insights from the Survey

Insurance Premium Hikes: Investors in the Southwest and Southeast are particularly worried about rising insurance premiums. In the Southwest, 56% of respondents are very concerned, and in the Southeast, 41% share this concern. These regions have felt the sting of recent premium hikes the most.

Insurance premiums are a hot topic right now, and for good reason. Both homeowners and investors are feeling the pinch of rising costs. Investors must factor these increases into their financial models to determine which projects make sense. While it might impact some investment decisions, most savvy investors will likely adjust their offers to offset the higher costs. Whether this will affect prices on a large scale remains to be seen, but it’s something everyone is keeping an eye on.

Home Price Expectations: Regarding home prices, investors are generally optimistic. In the Southeast, where Groundfloor has a strong presence, 59% of investors expect prices to increase by 1% to 5% over the next year. Only 17% anticipate a slight decrease of 1% to 5%.

Rent Expectations: Nationally, investors expect rents to rise by 1% to 5% over the next year. The West and Northeast lead the way, with 68% of respondents forecasting this increase, followed by the Southeast at 55%. This aligns with our Market Trend’s previous blog post discussions about the positive outlook for single-family rental homes.

National Market Assessment: When asked about the national housing market, 54% of investors believe it is underbuilt, while only 8% think it’s overbuilt. This view is likely influenced by the number of homes needing renovations. Groundfloor projects, which often involve upgrading existing housing stock, are well-positioned to address this need.

Natural Disasters and Climate Change: Climate change is an increasingly important factor for investors, especially as it relates to rising insurance premiums. While 68% of respondents are only somewhat concerned about natural disasters and weather-related property damage, the financial impact of climate change seems unavoidable. Whether or not everyone agrees on the politics of climate change, its effects on property insurance costs are real.

Top Investor Concerns: Over the next 12 months, the biggest worry for investors is the prospect of "higher for longer" interest rates, with 32% citing it as their main concern. Housing affordability follows closely at 27%. Other concerns include unemployment risk (8%), home price corrections (7%), and rising insurance premiums (7%). This shows a general confidence in current price levels but an awareness of the challenges posed by prolonged high interest rates. Looking further ahead, housing affordability remains the top concern over the next decade, with 32% of investors worried about it, while undersupply and economic risks together garner 22%.

Investment Activity: Looking at their plans for the next 12 months, 58% of investors say they are very likely or somewhat likely to buy a property, while only 33% are very or somewhat likely to sell. This bullish sentiment suggests that investors are optimistic about higher rents and prices, and a potential easing of high interest rates might spur more buying activity.

In summary, the survey reveals a cautious optimism among residential housing investors. They are prepared to navigate rising insurance premiums, potential interest rate changes, and other market dynamics to seize investment opportunities. It’s clear that while there are challenges ahead, the investment outlook remains positive for those ready to adapt.

Have Questions or Comments?

Please reach out to customer support at support@groundfloor.us or 404-850-9223, Monday through Friday, 9am – 5pm EST.