Re: Instrument to hedge real estate investments
From: sinister (sinister_at_nospam.invalid)
Date: 03/29/05
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Date: Tue, 29 Mar 2005 10:24:20 GMT
"jfaughnan" <jfaughnan@spamcop.net> wrote in message
news:1112076745.751936.67770@g14g2000cwa.googlegroups.com...
> It's often claimed that we've moved from a partially deflated equities
> bubble to a still expanding residential real estate bubble. This is a
> challenging time for anyone considering real estate purchases; one
> hates to buy an asset that may depreciate by as much as 30% over the
> next five years. True, the risk is low if one can hold for at least 10
> years, but that's hardly a guarantee.
>
> So I'm a bit surprised that we don't see instruments advertised for
> retail investors who want to hedge on home purchases. This situation
> seems tailor made for a bit of insurance. Buyers who feel that real
> estate is priced irrationally ought to be able to buy an instrument to
> buffer a precipitous fall in value that may occur over the next five
> years.
>
> Such instruments doubtless exist for large investors, but has any
> vendor packaged them for retail investors? A real estate boom is just
> the right time to deliver a 'bit of insurance'.
>
> So if this hasn't happened yet, why not?
I think Yale's Shiller has gotten some finance house(s) to start offering RE
hedges.
One "sort of a" hedge would be one against increases in interest rates, I
would guess.
> meta: jfaughnan, jgfaughnan, real estate, investment, derivatives,
> hedging, hedge, put, option, insurance, investment, finance
>
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