Introducing the BiggerPockets Investor Sentiment Survey: How Do Investors View Today’s Market?

In an ongoing effort to provide real estate investors with unique and actionable information, we’re releasing our new BiggerPockets Investor Sentiment Survey. Each month, we’ll be sending out a survey to a sampling of our audience in order to understand how investors are feeling about the market currently and in the near future.

Our aim is to ask some of the same questions each month, and over time we’ll be able to show trends in investor sentiment. We’ll also add one-time questions every so often in case we want to get a pulse on a particular question at a particular time. We’ll then publish those results with some internal analysis and commentary for our BPInsights subscribers.

For this first iteration, we collected 2,902 responses from active investors over the first week of July.

Overview: July 2020

Early results from the BiggerPockets Investor Sentiment Survey suggest that investors are sensing a slight shift away from the strong seller’s market of the last few years and towards possible buying opportunities. That said, overall the data is fairly polarized, and there is very little consensus among investors about what is likely to happen. Just like with everything in 2020, it appears that investors are overall uncertain about what to expect next.

Buying and Selling Properties

Of all the data collected in this survey, the most consistently optimistic results were yielded when respondents were asked to either agree or disagree with the statement, “The next six month are a good time to buy an investment property.”

Almost 70% of respondents feel that this is either a “very good” or simply a “good” market to buy in, which should signal to all investors out there that the market is going to remain competitive. Investors don’t seem inclined to sit back and wait to see what happens—they’re looking for deals even during this unusual economic climate.

When asked if the next six months are a good time to sell a property, enthusiasm wanes, but a majority (51%) still believes that it’s a good market in which to sell.

These two graphs taken together paint an interesting picture. For the last several years, we’ve primarily been in a “seller’s market,” where sellers have pricing power over buyers. But our sentiment survey seems to suggest a slight shift, where more investors feel that it’s a good buyer’s market than feel it’s a good seller’s market. It will be interesting to monitor this dynamic over the coming months to see if a true buyer’s market develops (likely to the delight of many BiggerPockets members).

When we asked investors about their feelings toward appreciation over the next six months, investors start to show their pessimism. The most common answer was “disagree,” which was a more common answer than “agree” and “strongly agree” combined. Given the state of the world, it’s not hard to imagine why most investors are not forecasting any price appreciation for the second half of 2020.

If investors are looking to buy, it’s encouraging to see that the majority of investors feel that it will be relatively easy to secure financing.

It should be noted that about 35% of respondents do believe it will be difficult to get a mortgage, but a larger cohort of respondents (45%) of users disagrees. So the data is pretty split, but a small majority believes financing should be attainable.

Because interest rates are low, it does create an environment that is ripe for investing. There have been many reports in the media recently that banks are tightening their loan criteria, so it could be difficult for people without W2 jobs or several mortgages to get new financing, while those with traditional employment and little debt could find a very favorable financing market.

Rental Market

Rent appreciation is one topic where investors seem particularly split on what they expect to happen over the next six months.

Very few investors have strong opinions about this (only 6% said “strongly agree,” and 3% said “strongly disagree”), and the three less-extreme options are essentially tied with about 30% of respondents saying they “agree,” “disagree,” or are neutral to this question. If you want my opinion, I think this will depend largely on the market. Cities that are sizable and have large numbers of COVID-19 cases are very unlikely to see rent growth, while suburban and rural markets show signs of strength.

While many investors are still concerned about property vacancy in these uncertain economic times, I am encouraged that the (small) majority of users remains unconcerned about vacancy. We don’t have data for this back in March and April, but if I had to guess, I think the vast majority of respondents would have been concerned about vacancy just two or three months ago.

Conclusion

This is just the beginning of our Sentiment Index, but the results are already providing valuable information to investors. To me, the biggest takeaway so far is that investors are sensing a shift towards a more buyer-friendly market and away from the seller-dominated market that has categorized the last several years.

What are your thoughts about the investing environment over the next 6 months?

Comment below and let us know what you’re thinking is. And stay tuned for more updates on the BiggerPockets Investor Sentiment Survey next month—we’ll start showing trends and patterns that can help you understand which way the market is heading.