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Further Declines for Multifamily Stock Index
During the month of March the MFSI fell by 153, points wiping out all gains this year and putting it in mildy negative territory for the first time in 2007. The March decline — a shade more than four-and-one-quarter percent — is one of the largest monthly declines in the past two years, and follows an even larger decline in February.
With this substantial decline, the MFSI finds itself about 11% off its all-time high — set just two months ago — but is still more than 11% higher than it was just 12 months ago. During the past month, the value of the S&P 500 with dividends reinvested rose by more than 1% and, as a result, it now finds itself almost 12% above where it was one year ago. Because the MFSI declined while the S&P 500 with dividends rose during the month of March, the performance gap — or percentage difference — between the two indexes declined from 174 last month to 159 percent in March, its lowest reading in nine months.
1 For initial article discussing the MFSI in detail see NAHB Multifamily Market Outlook, January 2002. 2 Percent difference is defined as (MFSI minus S&P 500 with dividends)/S&P 500 with dividends.
Despite the very strong 89% rise in the S&P 500 since its recent low set in October 2002, the MFSI rose 140% during the same 54-month time period. In addition, the MFSI dramatically outperformed the S&P 500 over longer time periods including the past five, six and seven years. Since December 1998, the MFSI has risen by a whopping 242% while the S&P 500 with dividends reinvested has gained a meager 32%. During the month of March, the price-to-earnings ratio (P/E) of the MFSI eased slightly and now stands at 20.13 while the dividend yield, defined as the total cash dividend payments divided by the current stock price, and which moves in the opposite direction rose to 3.52%. The MFSI is an index of 22 publicly traded US headquartered firms, including 17 REITs, principally involved in multifamily ownership and management.
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