Multifamily Stocks Take a Hit
During the month of July, the MFSI fell by slightly more than 345 points, and has now declined in seven of the past nine months. As a result of this most recent decline, the MFSI is now down slightly more than 15% year-to-date. The July decrease of a shade over 10% is the largest monthly decline ever, and has put the MFSI in negative territory year-over-year for the first time in more than four years. With this large fall, the MFSI finds itself about 22.5% off its all time high—set just six months ago—and is more than 6% lower than it was just 12 months ago.

During the past month, the value of the S&P 500 with dividends reinvested fell by a more modest 3.1% and, as a result, it still finds itself more than 16% above where it was one year ago. Because the MFSI declined by more than three times as much as the S&P 500 with dividends during the month of July, the performance gap—or percentage difference—between the two indexes decreased from 138% last month to 120% in July, its lowest reading since May 2005. 

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.

Despite the very strong 95% rise in the S&P 500 since its recent low set in October 2002, the MFSI has risen 109% during the same 58-month time period. In addition, the MFSI continues to dramatically outperform the S&P 500 over longer time periods including the past five, six and seven years. Since December 1998, the MFSI has risen by 198% while the S&P 500 with dividends reinvested has gained a meager 36%. During the month of July, the price-to-earnings ratio (P/E) of the MFSI declined slightly and now stands at 18.15 while the dividend yield, defined as the total cash dividend payments divided by the current stock price, and which moves in the opposite direction, increased to 4.95%.  The MFSI is an index of 21 publicly traded US headquartered firms, including 17 REITs, principally involved in multifamily ownership and management. [ return to top ]