Multifamily Stocks Reflect Housing's Difficulties
During the month of April the MFSI fell by 92 points, and has now declined for three straight months, something that has occured only twice before, the last time occurring in early 2003. As a result of these declines, the MFSI is now down 5.5% year-to-date. The April decline of a shade less than 3% is one of the larger decline in the past two years, and follows on the heels of a larger decline in March and a still larger decline in February.

With this most recent decline, the MFSI finds itself about 14% off its all-time high—set just three months ago—but is still more than 11% higher than it was just 12 short ago. During the past month, the value of the S&P 500 with dividends reinvested rose by almost 4.5% and, as a result, it now finds itself more than 15% above where it was one year ago. Because the MFSI declined while the S&P 500 with dividends rose during the month of April, the performance gap—or percentage difference--between the two indexes declined from 159% last month to 142% in April, its lowest reading in 16 months. Despite the very strong 97% rise in the S&P 500 since its recent low, set in October 2002, the MFSI has risen 134% during the same 55-month time period. Historically, the MFSI has 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 233% while the S&P 500 with dividends reinvested has gained a meager 38%.

During the month of April, the price-to-earnings ratio (P/E) of the MFSI eased slightly and now stands at 19.74 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 3.64%. The MFSI is an index of 21 publicly traded US headquartered firms, including 17 REITs, principally involved in multifamily ownership and management.

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For initial article discussing the MFSI in detail see NAHB Multifamily Market Outlook, January 2002.  Percent difference is defined as (MFSI minus S&P 500 with dividends)/S&P 500 with dividends. [ return to top ]