Multifamily Stocks Contract, but Still Outperform the Market
During the month of December, the MFSI fell by about 21 points, or close to one full percentage point. With this slight decline, the MFSI is still at its third highest reading of all time, and is almost 9% higher than it was 12 months ago. During the past month, the value of the S&P 500 remained unchanged and, as a result, finds itself almost 5% above where it was one year ago. Because the MFSI fell while the S&P 500 with dividends was flat during the month of December, the performance gap—or percentage difference—between the two indexes declined from 132% in November to 130% in December, which is just 12 percentage points lower than the high-water mark of 142% set in July of this year, and currently is the fourth highest gap reading ever recorded.

Despite the very strong 62% rise in the S&P 500 since its low in late 2002, the MFSI has risen a staggering 82% during the same 39-month time period. In addition, the MFSI continues to dramatically outperform the S&P 500 over longer time periods including the past four, five and six years. Since December 1998, the MFSI has risen by a whopping 159%, while the S&P 500 with dividends reinvested has gained a meager 13%.

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

During the month of December, the price-to-earnings ratio (P/E) of the MFSI eased slightly to 17.29 while the dividend yield, defined as the total cash dividend payments divided by the current stock price, and which moves in the opposite direction, now stands at 5.20%. The MFSI is an index of 26 publicly traded US headquartered firms, including 22 REITs, principally involved in multifamily ownership and management. [ return to top ]