Multifamily Stocks Rise, after Three Months of Decline
During the month of January, the MFSI rose by slightly more than 136 points—its first increase in three months and its largest increase in eight. Despite the latest rise, the MFSI is still off almost 14% over the past three months. The January jump of a bit more than 5% erases all the ill effects of the December decline and puts the MFSI in positive year-to-date territory for the first time in eight months. With the latest increase, the MFSI finds itself off 1,060 points, or about 28% off its all-time high reached in January 2007. During the past month, the value of the S&P 500 with dividends reinvested fell exactly 6% and, as result, finds itself down almost two-and-a-half percent over the past 12 months, the first time it has been in negative territory year-over-year since the middle of 2003.

Because the S&P 500 with dividends decreased by 6% while the MFSI increased by more than 5% during the month of January, the performance gap—or percentage difference—between the two indexes increased from 92% last month to 115% in January—its second lowest reading since July 2004. Despite the very strong 86% rise in the S&P 500 since its recent cyclical low set in October 2002, the MFSI has risen by a slightly stronger 96% during the same 64-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 179% while the S&P 500 with dividends reinvested has gained a much smaller 30%.

During the month of January, the price-to-earnings ratio (P/E) of the MFSI weakened slightly and now stands at 14.96, 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 6.8%. The MFSI is an index of 19 publicly traded US headquartered firms, including 16 REITs, principally involved in multifamily ownership and management.

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 ]