Real Estate Investors Accept the New Normal: 79% Still Buying Despite 6.7% Mortgage Rates

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News Flash

Investors Resigned to Current Rates in 2025

Real estate investors are officially abandoning hope for mortgage rate relief. A striking 57% now believe rates will stay above 6.5% for the next year—a dramatic jump from just 29% who felt this way in late 2024.

Current rates confirm this pessimism, with 30-year fixed mortgages hovering around 6.74% and 15-year fixed at approximately 5.91%.

Yet the high-rate environment isn't deterring acquisition plans. A whopping 79% of investors report being "somewhat" or "very likely" to purchase at least one property within the next 12 months.

The squeeze isn't just coming from borrowing costs. Rising insurance premiums are hitting bottom lines hard, with 59% of landlords reporting these costs have significantly reduced their cash flow.

The solution? Passing costs along. A decisive 83% of investors plan to raise rents in the next 12 months.

Home Price Growth Slows as Regional Markets Split Paths

National home appreciation is cooling off, with quarterly growth moderating to just 2.0% according to Clear Capital's latest Home Data Index. Annual growth stands at a modest 3.5% — a far cry from the heady appreciation of recent years.

But look beyond national averages and you'll find a tale of diverging markets.

The Midwest is stealing the show with 3.3% quarterly growth, while the Northeast boasts impressive 7.0% annual gains.

Meanwhile, Southern markets are barely keeping pace. The region posted anemic quarterly growth of just 1.1% and annual appreciation of a paltry 1.4%.

Some markets are actually moving backward. Miami is experiencing price declines both quarterly and annually, swimming against the national tide of modest growth.

The days of uniform, rapid appreciation appear to be behind us. Instead, we're entering an era where your property's performance depends increasingly on geography. That ZIP code matters more than ever.

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More You Should Know

• Construction Rebounds, Data Centers Lead: The nonresidential construction industry saw a significant Q2 2025 rebound, with 12 sectors, including power projects, airports, manufacturing, and notably data centers, experiencing strong year-over-year growth. [Source]

• MSR Market Holds Strong: Despite declining mortgage rates and some pressure on fair values, the mortgage servicing rights (MSR) market showed strong pricing and high demand in June 2025, driven by low mortgage production volumes. [Source]

• Housing Credit Sees Boost: New reconciliation tax legislation permanently increases low-income housing tax credit 9% allocations by 12% and reduces the private activity bond financing threshold to 25%, aiming to finance 1.22 million additional affordable rental homes. [Source]

• Housing Inventory Continues Climb: The U.S. housing market continued its rebalancing in June 2025, with active inventory hitting a 20-month high of 1.08 million homes and over 20% of listings seeing price cuts, although median home prices rose only slightly. [Source]

• Home Delistings Soar, Sellers Waiting: Home delistings surged 35% year-over-year in 2025 as sellers, leveraging strong equity, increasingly withdrew their properties from the market to await more favorable conditions instead of accepting lower offers. [Source]

• CRE Market Stabilizes: Mid-2025 marked a stabilization in commercial real estate, as increased leasing across office, multifamily, and industrial sectors reflected a tenant shift towards prioritizing functional, quality spaces with modern amenities. [Source]

• Tax Reform Benefits Real Estate: The U.S. Senate passed federal tax reform legislation, incorporating key REALTOR® priorities such as an increased SALT deduction cap, protection for 1031 like-kind exchanges, and permanent extensions for the mortgage interest deduction and qualified business income deduction, significantly benefiting real estate professionals and homeowners. [Source]

• Commercial Property Prices Stall: Commercial property prices remained largely flat in June 2025, with the Green Street Commercial Property Price Index showing minimal annual growth as elevated interest rates continue to suppress valuations. [Source]

• Mortgage Rates Continue Recent Decline: Mortgage rates have decreased for the fifth consecutive week, with the benchmark 30-year fixed mortgage reaching 6.67%, offering some relief to homebuyers as the Federal Reserve maintains a cautious stance on interest rates. [Source]

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