Multifamily Stocks End Worst Year Ever
During the month of December, the MFSI declined by slightly more than 130 points, ending the worst year for the MFSI since its inception in 1999. With the latest fall, the MFSI has declined in seven of of the past 12 months, posting a cumulative loss of 870 points during all of 2007and returning the MFSI to levels not seen since the end of 2005. The primary reason for the fall in the index is that the average size of the seven monthly declines this past year were consistently very much larger than the rises experienced during the months of January, May, August, September and October.

With the December decline of a shade less than 5%, the MFSI has fallen almost 1,200 points from its all-time high reached in January 2007. Moreover, the MFSI remains in negative territory year-over-year for the sixth straight month, this for the first time in almost five years. With this latest slide, the MFSI finds itself about 31% off its all-time high—set just 11 months ago—and is almost 25% 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 three-quarters-of-one percent, and yet still finds itself almost five-and-a-half percent above where it was a year ago. Because the S&P 500 with dividends decreased by about one-sixth as much as the MFSI during the month of December, the performance gap—or percentage difference—between the two indexes decreased from 100 % last month to 92% in December—its lowest reading since July 2004. Despite the very strong 98% rise in the S&P 500 since its recent cyclical low set in October 2002, the MFSI has risen by a very strong 86% during the same 62-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 165%, while the S&P 500 with dividends reinvested has gained a much smaller 38%.

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 15.07 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 6.6%. 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 ]