MultiFamily Market Outlook - 01/29/2009 (Plain Text Version)

View Graphical Version | Subscribe to NAHB Publications | Email our Editor...
NAHB Home Page| Browse other NAHB e-publications |Search back issues

In this issue:
New Data Confirms Low Number of School-Aged Children in Multifamily
Multifamily Starts Drop, Despite Decline in Single Family Production
Competition from Vacant Properties Puts Pressure on Rents
2009 Economic Strife Could Make Record History
MFSI in Negative Territory Three Months in a Row

MFSI in Negative Territory Three Months in a Row

During the month of December the MFSI rose by 29 points. With this small monthly increase the MFSI is now down by slightly less than 26% year-to-date, its worst performance ever and the first time it has been in negative territory year-to-date for three consecutive months in almost one year.

The November increase of 1.5% keeps the MFSI at a level last seen in late 2004—more than 50 months ago. Moreover, with this slight rise the MFSI finds itself at 1,880 points, or almost 49% off its all-time high reached in January 2007. During the past month, the value of the S&P 500 with dividends reinvested rose by slightly more than 1% and now finds itself down exactly 37% over the past 12 months, the first time it has been in negative territory for 12 straight months year-over-year in more than six years.

Because the S&P 500 with dividends increased by about 1% while the MFSI increased by 1.5% during the month of December, the performance gap—or percentage difference—between the two indexes increased from 125% last month to 126%. Despite the very strong 25% rise in the S&P 500 since its cyclical low set in October 2002, the MFSI has risen by a substantially stronger 38% during the same 74-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.

¹For initial article discussing the MFSI in detail see NAHB Multifamily Market Outlook, January 2002.
² % difference is defined as (MFSI minus S&P 500 with dividends)/S&P 500 with dividends.

Since December 1998, the MFSI has risen by a whopping 97% while the S&P 500 with dividends reinvested has declined by slightly exactly 13%. During the month of December the price-to-earnings ratio (P/E) of the MFSI eased and now stands at 7.30 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 9.75%. The MFSI is an index of 19 publicly traded US headquartered firms, including 16 REITs, principally involved in multifamily ownership and management.