The Rent Roll with Jay Parsons – Episode #57

Guest: Chris Finlay (Founder & CEO, Middleburg Communities)
Date: October 30, 2025
Theme: Is It Time To Worry? Market Uncertainty, Headwinds, & Opportunities in Rental Housing

Episode Overview

This episode tackles the pressing question on the minds of many in the rental housing sector: Is it time to worry? Host Jay Parsons breaks down the current mix of positive and negative signals affecting the rental market, from economic indicators to supply and demand, before conducting an in-depth interview with Chris Finlay, CEO of Middleburg Communities. Together, they explore where the market stands, the future of multifamily and SFR investment, and discuss the positive impact of the nonprofit Entryway.

Key Discussion Points & Insights

1. Mixed Economic Signals: Pessimism vs. Resilience

• Confusion & Mixed Signals:
  • Soft job market, weak consumer confidence, sluggish leasing, yet a booming stock market and healthy indicators among higher-end renters.
  • “Uncertainty has a freezing effect…on relocations, leases, home purchases, hiring decisions, and expansions.” – Jay Parsons [06:11]
• Forecasts & Industry Mantras:
  • Outlook shifting from “Survive till 25,” to “Fix in 26,” and now “Heaven in 2027.”
  • Industry leaders like David Schwartz (Waterton) now expect real growth in 2027, consider 2026 “gravy.”
• Consumer Confidence:
  • Now at a lower point than during the 2009 crisis, despite much better fundamentals (e.g., lower unemployment, better renter health in class A/B units).
  • Parsons notes the paradox that surveys show people feel OK about their own situation, but pessimistic about “most Americans.”
• Job Market & Layoffs:
  • Unemployment slightly up, but not spiking; white-collar layoffs (e.g., Amazon) fuel AI/job loss fears, but still mainly isolated.
  • Wage growth remains strong, particularly among younger (often renting) workers – above pre-COVID levels.

2. Supply, Demand, and Leasing Activity

• Macro Demand Remains Positive:
  • Net absorption (renter household formation) robust; high retention and flight-to-quality as renters leverage concessions to upgrade rather than seek cheaper units.
  • “At least in the A and B market, we see rent-to-income ratios…the lowest since 2019, back below 22%.” – Jay Parsons [19:00]
• Leasing and Vacancy:
  • Leasing activity and traffic down due to increased supply (apartments and SFR), not solely economic softness.
  • Large supply wave (new builds, accidental landlords in SFR), spreading demand thin and increasing competition.
• Concessions and Rentals:
  • Tales from the field (e.g., Denver) of renters receiving two-month concessions on renewals—“that is pretty wild.”
• Absorption Math:
  • Parsons predicts absorption rates will drop “regardless of the economy,” simply because less new supply is coming—don’t mistake this for falling demand.
  • Watch vacancy versus absorption: if supply falls faster than absorption, vacancies tighten and rents rise; if not, it could signal deeper trouble.

3. Recent Headlines & Industry Trends

• Moderating Private Credit:
  • Blackstone’s John Gray says “the era of bumper private credit returns has ended,” with yields normalizing, possibly prompting a shift back toward LP equity.
• Institutional SFR Investors Net Sellers:
  • “For all the noise around institutional investors buying up all the houses…the reality [is] institutions sell a lot of houses.” – Jay Parsons [31:08]
• Concessions on Renewals Highlight Market Softness
• Fannie/Freddie and Construction Loans:
  • Renewed interest in allowing GSEs to make construction loans, which could stabilize construction lending cycles and increase liquidity.
• Lease Application Fraud:
  • Epicenter in Atlanta; up to half of applications reported fraudulent. Market softness (and fraud) often mistakenly blamed solely on affordable housing shortages, when class C units are still widely available.

4. Rental Housing Trivia: Pioneering Women in Architecture

• First all-female US architecture firm: Gannon & Hands (Mary Gannon and Alice Hands) revolutionized tenement design in 1890s New York—better light, ventilation, community, and foundational ideas for modern apartment layouts.
• “Their designs…became the foundation for the modern wrap apartment buildings and garden apartment properties.” – Jay Parsons [31:58]

Featured Interview: Chris Finlay, CEO of Middleburg Communities

(Begins at [32:34])

Middleburg’s Evolution & Market Approach

• Growth Story:
  • Began as an acquisition-focused firm (early 2000s), shifted post-GFC to full integration—emphasizing in-house development, construction, management, and research ([32:52]).
  • “Being able to drive value ultimately is how we got here.” – Chris Finlay [33:18]
• Market Focus:
  • High-growth Southeast/Sunbelt markets, with hubs in Northern Virginia, Charlotte, Orlando, Atlanta, and moving into Dallas ([33:57]).

Acquisitions vs. Development: Where’s the Value Now?

• Finding value in acquisitions is difficult; development, while perceived as riskier, is favored by Middleburg for long-term upside ([34:35]).
• “We still think that anything you start today, deliver 24 months from now, is really well-timed.” – Chris Finlay [35:22]
• Distress is overhyped for quality class A assets; much “potential distress” is just 3% of the $2T+ multifamily debt market ([36:23]).

Development Strategy & Construction Insights

• Value comes from controlling the value chain: in-house land acquisition, standardized (prototyped) designs, bulk purchasing, and cost confidence within 1% over a year.
  • “Our construction team has dialed it in so much that within a year we can keep our cost within 1%.” – Chris Finlay [39:27]
• Use of prototypes and directly-negotiated materials contracts drive efficiency on 3,000-4,000 units/year builds.

Cost Pressures, Labor & Tariffs

• Costs have declined 2% this year; “not really impacted adversely” by tariffs or immigration policies, due to domestic sourcing and stable subcontractor strategies ([40:42]).
• “Our cost has actually declined this year.” – Chris Finlay [41:22]
• Labor pipeline considered stable, though acknowledges some risk if output surges coupled with restrictive immigration ([42:51]).

Product Strategy: Luxury, Workforce, and BTR

• Middleburg builds across spectrums but sees most resilient value in workforce/attainable product:
  • “Being able to deliver something at a very low cost basis where we can undercut prevailing class A rents by $100 or $150/unit/month and also give them more space—that’s a real winning combination.” – Chris Finlay [43:36]
• Large units, smart space utilization, and proximity to employment matter most in drawing demand ([45:16]).

Suburban Strategy & Site Selection

• Not a “drive till you qualify” approach—target first- and second-ring suburbs near job growth nodes ([46:08]).
• “People drive to own but they don’t drive to rent…they want to be proximate to employment.” – Chris Finlay [46:19]
• Most pipeline deals are in major markets, not exurbs/tertiary, as capital and jobs favor these in a recovery ([48:12]).
• Proximity-to-jobs research (via a “job proximity index”) is key ([51:01]).

What Makes a Market Attractive?

• Employment growth and income mix of new jobs are primary market drivers.
  • “Are jobs being created in higher strata of incomes…those create more retail and service jobs to support them.” – Chris Finlay [52:08]

Memorable Moments & Quotes

• “Uncertainty has a freezing effect on major decisions, including relocations and lease signings…” – Jay Parsons [06:11]
• “Absorption is going to go down regardless…because supply is correlated with absorption…less supply, less absorption capacity.” – Jay Parsons [27:13]
• “All the liquidity in the debt markets, particularly private credit, has allowed people to kick the can down the road.” – Chris Finlay [36:10]
• “Our candidates [Entryway participants] have tripled the tenure of your typical entry-level employee.” – Chris Finlay [58:22]

Notable Segment Timestamps

• Market Overview & Industry Signals: [00:03 – 31:30]
• Rental Housing Trivia: [31:30 – 32:30]
• Chris Finlay Interview Begins: [32:34]
• Middleburg Background: [32:52]
• Acquisitions vs. Development: [34:33]
• Development & Construction Efficiencies: [38:01]
• Labor, Tariffs, and Cost Trends: [40:42]
• Product Strategy (Luxury, Workforce, BTR): [43:19]
• Market Selection & Job Proximity: [46:08, 51:01]
• Entryway Nonprofit Story: [53:10]
• Entryway Impact & Successes: [56:36]
• Episode Wrap: [59:12]

Chris Finlay on Entryway (Formerly Shelters to Shutters)

• Genesis: Sparked by an article on situational homelessness; realized most homeless are not chronically so, but are working-class people who hit a crisis ([53:52]).
• Mission: Matches people experiencing homelessness—motivated for work—with property management jobs (with discounted housing).
• Impact:
  • Candidates move from homelessness to property management roles in as little as three years ([56:45]).
  • “It’s a hand up, not a handout—an opportunity to crack the door and say, if this is something you’re interested in, we can offer you a path.” – Chris Finlay [58:51]
  • Entryway participants triple the retention of standard entry-level hires ([58:22]).
• Expansion: Now in 15 cities nationwide; enhanced focus on pre-placement training.

Tone & Takeaways

Jay Parsons and Chris Finlay keep the discussion realistic but not alarmist—acknowledging uncertainty but highlighting clear-headed ways to frame risk and opportunity in rental housing. Data, research, and operational control are their steadying themes, while Entryway’s story brings optimism and a sense of meaningful impact.

For listeners seeking clarity amid market noise, this episode offers not just analysis, but actionable perspective drawn from industry leaders at the heart of rental housing’s present and future.