Podcast Summary: The Rent Roll with Jay Parsons

Episode 52 – Scott Eisen | Q3 '25 SFR Market Update & Outlook
Date: September 25, 2025
Host: Jay Parsons
Guest: Scott Eisen, Chief Investment Officer & EVP, Invitation Homes

Overview

In this episode, Jay Parsons provides a deep dive into the current state and outlook of the single-family rental (SFR) and build-to-rent (BTR) housing sectors. He challenges prevailing media narratives with current data on leasing and rent trends, and later sits down with Scott Eisen of Invitation Homes—one of the country’s largest SFR REITs—for a myth-busting, data-driven interview touching on SFR acquisitions, market dynamics, home builder partnerships, and scaling strategies.

Key Discussion Points & Insights

1. Current SFR & BTR Market Dynamics (00:00–24:00)

• Headline Myth: Many believe that weak home sales mean a flood of renters to SFR. The reality: it’s more complex. Leasing homes is taking longer and rent growth has slowed to its lowest in seven years, though SFR still outpaces multifamily.
• Market Data Insights:
  • SFR indices from John Burns Research are all modestly below 50 (scale where <50 = contraction):
    • Q2 Leasing activity: 48 (vs. 50 in 2024, 61 in 2023)
    • Expected leasing activity (next 6 months): 47 (vs. 49 and 59 previously)
    • Time on market/vacancy: 35 (vs. 46 and 50)
  • Implication: More inventory and increased competition, especially in the Sun Belt; leasing is slower and units stay vacant longer.
  • SFR new lease rent growth: +2.6% year-over-year (lowest since 2018); even softer in BTR: +0.7% due to concentrated supply and competition within similar demographics.
  • SFR/BTR still outperforming multifamily, where rent growth is almost flat (+0.2%).
• Wage Growth:
  • A key “silver lining”—for 32 straight months, wage growth has outpaced rent growth across rental housing (wages most recently +4.1% YoY per Atlanta Fed).

Notable Quote

"Wages outpace rents — that widens the demand funnel. So long term, that is a win-win. Short term, it is a more challenging environment." (Jay Parsons, 17:50)

2. SFR Rent Growth & Home Sale Trends

• Contrary to popular belief, SFR rent growth is tightly coupled with strong home sales—not the opposite.
• Turnover Rate: Turnover in SFR REIT portfolios has settled at 25%, historically low but unchanged from 2021, illustrating that longer rentals are not just due to high mortgage rates but also product improvements and market factors.

Notable Quote

“If you view the rental market only through the lens of a homeowner, you have a skewed view and you’re missing the bigger picture.”
(Jay Parsons, 22:13)

3. BTR Supply Outlook

• BTR deliveries peaked in 2024, with a significant 50%+ supply dropoff expected by 2026 across all major markets (Dallas, Phoenix, Atlanta, etc.). Expect a pivotal shift in the supply story next year.

4. Demographics Drive Long-Term SFR Demand

• Core SFR demographic: 35–44 year-olds are the largest cohort (3.4 million renter households), with another 3.3 million aged 25–34 "aging into" prime SFR demand.
  • Nearly 4 million SFR households earn $100k+, and many value the flexibility and quality SFR offers.

5. Rental Housing News Highlights (24:00–31:13)

• Federal Reserve Rate Cut: 25 bps cut; real estate mostly a minor Fed concern.
  • Jerome Powell: "Pretty much a nationwide housing shortage… there’s a deeper problem here that is not a cyclical problem that the Fed can address." (28:40)
  • Analysis: While rates matter, without rent stabilization and certainty around market rents, construction won’t meaningfully accelerate.
• M&A: Kennedy Wilson acquires Toll Brothers’ apartment platform, marking homebuilders’ broader retreat from apartment development to focus on core business.
• Rent & Credit Scores: 13% of renters now have rent payments reported to bureaus—a “win-win” for renters and managers.
• UK Policy: Anticipated “Renters Rights Bill” causes landlords to sell rental homes pre-legislation, likely to increase costs and reduce rental supply in the UK—illustrating the law of unintended consequences.

6. Trivia Answer

• Last time it was cheaper to be a homebuyer than an SFR renter:
  • February 2021. Now (July 2025), it is $881/month more expensive to buy than rent a single-family home. For apartments, the gap is $1,600/month.

Interview: Scott Eisen, Chief Investment Officer, Invitation Homes (31:13–end)

Scott’s Background and Path to SFR (31:16–33:29)

• Former investment banker at Merrill Lynch & Citibank; worked on early REIT IPOs and watched the alt real estate sector rise.
• Was recruited by Invitation Homes after years as their banker.

SFR Myths & Market Realities

Myth: Institutional Buyers Dominate SFR

"The reality is we represent a very small fraction of the housing market, less than a few percent. The real conversation should really be about expanding access to housing, not blaming any individual tiny group." (Scott Eisen, 34:00)

• Current Data: Institutional (REIT) ownership is still a tiny share; main affordability drivers are high mortgages and insurance rates.

Myth: Institutions Buy Up All MLS Homes

• Only about 5% of Invitation’s acquisitions come from the MLS; majority now comes from new construction via builder partnerships.

“[Buying from builders] creates new supply... it's a lower capital investment for us long term because you're getting a brand new home...” (Scott Eisen, 35:51)

• Why the Shift Away from the MLS?
  • Existing homes on MLS often need significant capital expenditure (repairs/updates).
  • Homeowners typically outbid investors due to the emotional/intrinsic value of a home.
  • Institutional buyers need to hit certain yield targets, typically not met by older, higher maintenance housing stock.

Capital Recycling: Selling Old, Buying New

• Invitation regularly sells older homes (often in high-appreciation markets like Southern California) and buys brand new homes, typically in growth markets.
• Decision process is market-agnostic, focused on relative returns, portfolio scale, and property condition.

Relationship with Home Builders

• Invitation is a key purchaser from national and regional builders, buying both existing inventory and through forward purchase agreements.
• Builders increasingly discount “excess inventory,” and institutions like Invitation provide critical liquidity, allowing faster capital recycling for builders.

“We view ourselves as just being a supplementary source for the home builders… If we can continue to work with them and provide liquidity to them and give them confidence to start more communities over time… it’s a win-win.” (Scott Eisen, 47:33)

• Construction Lending Program: Launched to fill a gap as many banks withdraw from construction loans. Enables more BTR communities and provides Invitation with pipeline/operational advantages.

M&A, Scaling & Market Entry

• Consolidation Trend: Some smaller SFR portfolios, especially those from mid-sized startups formed after 2015, are seeking liquidity. Invitation offers 3rd-party asset/management services, joint ventures, and will consider platform/portfolio acquisitions.
• Achieving Scale: New market entry requires a path to at least 1,000 homes for operational efficiency.
  • Market evaluation based on population size, growth, and potential for scale (e.g., recently re-entered Nashville).

“If you have scale, your operating costs are lower and then you could likely build at a lower rent, which makes it more attractive… It’s ultimately to the benefit of the market.” (Jay Parsons, 58:51)

• Midwest Expansion: Midwest shows current strength but requires high population and identifiable scale-up potential; most focus remains on Sun Belt/growth markets.

Memorable Quotes & Moments

• On SFR Myths:

  “The real conversation should really be about expanding access to housing, not blaming any individual tiny group that supports the market.” (Scott Eisen, 34:10)

• On MLS Buying:

  “Less than 5% of our total acquisition activity has been on the MLS the last two years… we’ve really leaned in on helping buy and finance the construction of new homes.” (Scott Eisen, 35:35)

• On Builder Partnerships:

  “We view ourselves as just being a supplementary source for the home builders… If we can continue to work with them and provide liquidity… it’s a win-win.” (Scott Eisen, 47:39)

• On Scale:

  “For us to enter a new market, we’ve got to have a path to a thousand homes… It’s as much about the fact that, you know, if it’s a population under a million people, that’s probably a market that’s a little harder for us to get into.” (Scott Eisen, 58:24)

Key Timestamps

• 00:00–06:00: Challenging SFR market myths, high-level data review
• 06:00–24:00: Breakdown of SFR/BTR metrics, rent and wage growth, demographic drivers, turnover trends
• 24:00–31:13: News headlines: Fed rates, M&A, UK rental policy, rent/credit reporting
• 31:13–38:28: Interview intro, Scott’s background, SFR myths, institutional market share
• 38:28–50:12: On buying strategy (MLS vs builder direct), capital recycling, and builder relationships
• 50:12–52:48: Launching BTR construction lending, how Invitation works with small operators
• 52:48–59:59: Consolidation trends, scaling strategies, expansion challenges, operating cost benefits
• 59:59–end: Closing remarks

Conclusion

This episode provides a data-forward, myth-busting look into the realities of SFR and BTR markets. Key takeaways include the slow rental growth despite weak home sales, the importance of institutional scale for cost efficiency, and the increasingly symbiotic relationship between institutional SFR owners and national builders. Scott Eisen’s commentary underscores the nuanced, strategic approach Invitation Homes and similar operators must take, balancing builder partnerships, capital recycling, and market selection in a rapidly evolving housing landscape.