hedge your house?

By "this", are you refering to the CME real estate contracts? I can tell you all of the reasons to avoid them.
1) The contracts are very illiquid.
2) The illiquidity is reflected in wide bid/ask spreads and small size.
3) The index calculation methodology seems subjective.
4) There deferred months are priced at large discounts to the front month. That isn't good for short-hedgers.
5) The "opportunity" would be to buy the Fall/deferred contracts and hope for stabilization in prices so that the futures can converge up to the spot index when housing sales are expected to pick up.
 
Quote from nazzdack:

By "this", are you refering to the CME real estate contracts? I can tell you all of the reasons to avoid them.
1) The contracts are very illiquid.
2) The illiquidity is reflected in wide bid/ask spreads and small size.
3) The index calculation methodology seems subjective.
4) There deferred months are priced at large discounts to the front month. That isn't good for short-hedgers.
5) The "opportunity" would be to buy the Fall/deferred contracts and hope for stabilization in prices so that the futures can converge up to the spot index when housing sales are expected to pick up.
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not trading, but using these contracts to hedge your personal home against declines. Yes, i concur the 2 month lag and other items you mention are major negatives. are there other ways to hedge real estate exposure?

thanks, surf
 
Quote from gnome:

ProFunds has a mutual fund which is short RE, or you could short RE ETF.
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can you provide a bit more data on this ETF-- symbol, data page?
thanks!

surf
 
Quote from marketsurfer:

can you provide a bit more data on this ETF-- symbol, data page?
thanks!

surf
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I don't know of a specific short RE ETF, but surely there is one... they've got them for about everything. Or, you could short a RE ETF.... like IYR?

The symbol for ProFunds mutual fund which is short RE is SRPIX.
 
Quote from marketsurfer:

hedging against further housing declines seems like a good move for some people:

http://www.tradingmarkets.com/.site/eminis/commentary/guestcommentary/-77000.cfm

anyone actually try this?

surf
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http://www.tradingmarkets.com/.site/eminis/commentary/guestcommentary/-77000.cfm

Decent theory Surfer, but me thinks the actual execution of a hedge would be very difficult to pull off in real life. how many contracts does it take, questions like this come to my mind.

thanks for the idea, however.

BB
 
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