Posted by Charles_Ca on 11/10/05 1:31pm
Msg #75671

Charm: Forget Raging Bull and check this out!

Investors Can Trade Housing Futures Next Year

(November 10, 2005) -- Mortgage companies, homebuilders, and other investors in real estate will be able to trade housing-price futures on the Chicago Mercantile Exchange starting in April 2006.

The trading will allow investors to hedge home prices or gain exposure to the housing market without having to buy homes, says Macro Securities Research CEO Sam Masucci. The housing-price futures will be based on the median home price in 10 U.S. cities, enabling optimistic investors to buy contracts and make a profit if the increase in the price surpasses their costs by the expiration date and allowing apprehensive participants to buy put options that will pay them if the price declines.

A 65 percent jump in home prices from 2000 to 2004, as reported by the NATIONAL ASSOCIATION OF REALTORS®, is the reason the exchange plans to launch the real estate futures market.

Source: Hartford Courant (CT) (11/10/05); Carpenter, Dave

Reply by newlysmomva on 11/10/05 2:17pm
Msg #75712

The world just gets crazier and crazier. I"m still not clear on how it will work though.

Reply by Charm_AL on 11/10/05 2:37pm
Msg #75719

Wow! another commodity...wonder what the ratios will be. Contracts offered for the ten city choices are Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco or Washington, D.C. – or a composite index of the 10 cities.

Yep it looks like the investors in real estate, like the mortgage companies that hold tons of paper and homebuilders,etc are looking to hedge their investments! Especially because of falling housing prices around the corner.
Glad they are not just offering futures, that's way too scary for me. I've had little experience in gets/puts, too much tension. Risky business!

Reply by christiSocal on 11/10/05 3:23pm
Msg #75730

ok, I admit I'm clueless as to what this will mean to us?

Will it help us as sa's or will it slow business down. Or will it affect our business at all? Sorry, but with this type of thing my 1 blond hair really shows up! TIA

Reply by Charm_AL on 11/10/05 3:31pm
Msg #75737

Re: ok, I admit I'm clueless as to what this will mean to us?

In the big piture, the stock market talk about the new commodity doesn't affect you as an individual unless you decide to buy contracts and trade, just like pork bellies or coffee, etc.
It will help the real estate, mortgage companies and builders hedge their investments, while they have money invested, which in my opinion can't do any harm to us as SA's.

Reply by christiSocal on 11/10/05 3:36pm
Msg #75741

I was hoping it would be good for us. And since I don't

like pork bellies or coffee, I'm happy. Now if they go after chocolate I'm gonna have to go after them!

Reply by Nate_MN on 11/10/05 3:42pm
Msg #75744

Re: I was hoping it would be good for us. And since I don't

I highly doubt it will have any affect on signing agents, or our industry.

Reply by Charles_Ca on 11/10/05 5:49pm
Msg #75771

Oh, but they are offering futures!! NM