Multifamily Stocks Drop Dramatically
During the month of November, the MFSI declined by almost 450 points. That was its largest monthly decline ever, its first decline in four months and it emphatically ended what had been one of the MFSI's best performance periods in almost a year. Despite three straight monthly increases prior to this month, the MFSI has declined in six of the past 12 months, with the declines consistently being much larger than the increases. As a result of this latest plunge, the MFSI is now down almost 21% year-to-date. The November fall of a shade less than 14% returns the MFSI to a level it first breached about 24 months ago. Moreover, the MFSI remains in negative territory year-over-year for the fifth straight month, this for the first time in more than four-and-a-half years.

With this latest slide, the MFSI finds itself about 28% off its all time high—set just 10 months ago—and is more than 23% lower than it was just 12 months ago. During the past month, the value of the S&P 500 with dividends reinvested fell slightly less than four-and-one-quarter percent, and yet still finds itself almost 8% above where it was one year ago. Because the S&P 500 with dividends decreased by about one-third as much as the MFSI during the month of November, the performance gap—or percentage difference—between the two indexes decreased from 123% last month to 100% in November--it lowest reading since July 2004. Despite the very strong 100% rise in the S&P 500 since its recent low set in October 2002, the MFSI has risen by 95% during the same 61-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 a whopping 178% while the S&P 500 with dividends reinvested gained a much smaller 39%. 

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.

During the month of November, the price-to-earnings ratio (P/E) of the MFSI weakened slightly and now stands at 17.05 while the dividend yield, defined as the total cash dividend payments divided by the current stock price, and which moves in the opposite direction, strengthened to 6.2%. The MFSI is an index of 19 publicly traded US headquartered firms, including 16 REITs, principally involved in multifamily ownership and management. [ return to top ]