[emersonbiggins]

From U.S. News & World Report:

$this->bbcode_second_pass_quote('', '[')b]Betting on home prices
By Paul J. Lim

It's either a sign of a top in the housing market—or a tacit recognition that investors, after gorging themselves on real estate over the past decade, need some way to hedge their enormous housing market bets.

Either way, the Chicago Mercantile Exchange's plan to launch a new financial product next year that would allow investors to bet on the direction of residential real estate without actually buying homes is sure to attract interest.

The CME, which operates the world's largest futures exchange, recently said it would create housing-price futures contracts by the second quarter of 2006. The products are designed as a way for large investors, and especially institutions with giant real-estate holdings, to hedge their bets on the housing market in a particular city by buying futures contracts.

But the flip side is that investors could also use these products to place bets that the housing market will continue to boom—without actually having to go to those cities and buy real properties.

The exchange wouldn't be the first institution to bring such a product to market. HedgeStreet, an Internet-based financial exchange, already allows investors to wager on home prices in six cities: Chicago, Los Angeles, Miami, New York, San Diego, and San Francisco.

But the CME is a much larger player in the derivatives market and would add instant credibility to such a product. Moreover, its housing price futures contracts would allow investors to bet on the direction of real-estate prices in 10 key markets: Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C. The CME would also allow investors to place bets on the direction of a composite index of all 10 cities.

The Chicago Mercantile Exchange "is continually developing alternative investment products for customers seeking to better diversify their risk," says CME Chairman Terry Duffy. "With residential real estate as a significant asset class, these new contracts represent the creation of a novel derivatives product group that could attract new users to our markets."

CME Chief Executive Officer Craig Donohue added that "even as the Federal Reserve valued the U.S. residential real estate market at nearly $19 trillion in 2004, there is presently no liquid market or efficient means of hedging real estate, unlike the stock and bond markets. These products can provide market participants with an efficient hedging mechanism for real-estate risk and allow them to effectively diversify their portfolios."

[emersonbiggins]

shameless self-promotion...
*bump*

[PrairieMule]

Lady you are right on the money. Be thankful you live in Texas not California, Florida, Nevada Or New Jersey. Property Values in those states are doubling every 5 years and just does not make sense. People are refinancing to the hilt and they will be so upside down like a car note.

From your perspective, Let me ask you this. Which irritates you more- the Housing prices or bland Architecture on the house being financed?

[emersonbiggins]

$this->bbcode_second_pass_quote('PrairieMule', ' ')Which irritates you more- the Housing prices or bland Architecture on the house being financed?

[PrairieMule]

$this->bbcode_second_pass_quote('emersonbiggins', '')$this->bbcode_second_pass_quote('PrairieMule', ' ')Which irritates you more- the Housing prices or bland Architecture on the house being financed?

[emersonbiggins]

$this->bbcode_second_pass_quote('PrairieMule', 'S')orry, my bad Mister E-B!!

I work as a credit analyst for a motrgage company and I am just astonished by the market values that come back. I see Middle Class Californians refinancing their house every 6-9 months adding $5-7000 worth of fees and points to the principle.

[PrairieMule]

Here is an example. I bought a 3/2/2 1932 sq foot house built in 1975 got $95K in 1999. In 2004 it appraised for $130K but has backed down to 120ish. That same house in Sacramento California would go for $375,000 then reappraise for $425K next summer when 4 yrs ago it was purchased for $250K.

Clever name, but if someone said Look! emersomebiggins. Dolly Parton would come to mind first.


What kind of Architect are you?

[emersonbiggins]

$this->bbcode_second_pass_quote('PrairieMule', '
')What kind of Architect are you?

[emersonbiggins]

$this->bbcode_second_pass_quote('PrairieMule', '
')Clever name, but if someone said Look! emersomebiggins. Dolly Parton would come to mind first.

[Pops]

Before we get too off topic; my opinion of futures speculators is thus:

They are less than a cockroach; at least a cockroach adds something to the system, even if it is cockroach shit.

[PrairieMule]

$this->bbcode_second_pass_quote('Pops', 'B')efore we get too off topic; my opinion of futures speculators is thus:

They are less than a cockroach; at least a cockroach adds something to the system, even if it is cockroach shit.

[lowem]

Wow! Does this mean we can finally short the housing market?

[lowem]

$this->bbcode_second_pass_quote('PrairieMule', 'D')on't forget, Cockroaches do create more jobs than Future Speculators in the private sector ...