MultiFamily Market Outlook - 09/28/2007 (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 Vacancy Data Adds Local Information to the Mix
Starts Stronger than Expected
Rents Continue Rising Slowly in August
A Weak Economy, Getting Weaker Through Fourth Quarter
Multifamily Stocks Rebound Slightly

Multifamily Stocks Rebound Slightly

During the month of August, the MFSI rose by almost 134 points. Despite this recent welcome rise, the index will need to climb more vigorously to offset its declines in seven of the past ten months. As a result of the current rebound, the MFSI is now down just slightly more than 11% year-to-date. The August jump—a shade less than five-and-a-half percent—erases about half the decline sustained by the index last month.

However, the MFSI remains in negative territory year-over-year for the second straight month, and for just the second time in over four years With this large increase, the MFSI finds itself about 19% off its all time high—set just seven months ago—and is more than 6% lower than it was just 12 months ago. During the past month, the value of the S&P 500 with dividends reinvested rose by a more modest 1.5% and, as a result, finds itself more than 15% above where it was one year ago.

Because the MFSI increased by more than three times as much as the S&P 500 with dividends during the month of August, the performance gap—or percentage difference—between the two indexes increased from 120% last month to 126% in August. But that is still its lowest reading since May 2005, with the exception of last month. Despite the very strong 97% rise in the S&P 500 since its recent low set in October 2002, the MFSI has risen 118% during the same 59-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 211% while the S&P 500 with dividends reinvested has gained a meager 38%.

During the month of August, the price-to-earnings ratio (P/E) of the MFSI rose slightly and now stands at 19.22 while the dividend yield, defined as the total cash dividend payments divided by the current stock price, and which moves in the opposite direction, eased to 4.75%. The MFSI is an index of 21 publicly traded US headquartered firms, including 17 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.