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Now You Can Hedge the House
By JLP | May 24, 2006
This article, despite the fact that it has a lot of typos, does a good job of explaining some new indexes and futures that were launched recently, which created a new asset class called the housing market. The new indexes are called the S&P/Case-Shiller House Price Indexes and will follow a “repeat sales” methodology that was developed by Karl Case and Robert Shiller. The indexes will track the rise and fall of the price of the same houses sold over-and-over again. To start, S&P will publish ten individual metropolitian area indexes:
Boston
Chicago
Denver
Las Vegas
Los Angeles
Miami
New York Commuter Index
San Diego
San Francisco
Washington, D. C.
In addition to those ten indexes, S&P will also publish a weighted national composite index. The Chicago Mercantile Exchange (CME) began trading futures on these indexes.
Matthew Hougan, the author of the article expects these indexes to be a big hit and imagines insurance products based on the indexes. Geez,… that’s all we need is MORE INSURANCE PRODUCTS! The article also details some other new housing-related indexes from the National Association of Realtors and explains the differences between the S&P/CS version and the NAR version.
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