We’ve always been surprised that historically there has been no easy way to hedge one’s real estate exposure, especially given that for most people it’s their largest single asset (and liability!). So we were excited when HedgeStreet, an online derivatives marketplace, began offering contracts linked to the local urban markets of New York, Chicago, Miami, LA and San Diego earlier this year. Now the Chicago Mercantile Exchange is following suit, with plans to launch contracts based on 10 U.S. cities in April. The target audience is expected to include both institutions and individuals as well as hedge funds wanting an easy way to speculate on the direction of the real estate market. It all makes great sense in theory but does anyone know how the HedgeStreet product has been received in practice?
New Housing Market Hedges [MarketWatch]
New Exchange Forecasts Home Prices [MarketWatch]
The timing couldn’t be better for these products. It gives the smart money a chance to express their views without having to go through the hassle of selling and moving their family out. I’ve been thinking pretty seriously about buying some puts on NYC.
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