Wednesday, September 26, 2007

Real Estate Derivatives

I know I would welcome a real estate derivatives market in the US for commercial real estate. That was a concern of mine prior to the recent credit market turmoil - how to profit from the market w/o being into the market as deeply as owning property requires. This would seem to be a nice solution.

I'd love to be able to take a short position on the commercial real estate market in my area, especially given some of the dubious projects I've seen going up over the last few months. I understand that there exist products based on the Case/Shiller index as well, but there will be newer products coming out against it too. I wonder if they have any futures (or options, or other products allowing short positions) on the DC area market. THAT would be handy!

Actually, from scouring the CME site (a site I have serious mixed feelings about), I see that there are contracts on Washington, DC. I'll have to dig a bit deeper to see what kind regional coverage those contracts represent. I would think the bids on the DC contract would be dropping a bit more precipitously over time, but I guess the pessimism isn't that strong for the DC area. Hmmm. While I don't think the DC area will be nearly as hard hit as others, there is no way this region gets away clean. Affordability is a total bitch here. It feels like what it must be like to live in Mayfair, except nothing is in walking distance. I'll definitely take a closer look at the products CME offers on housing, as they could potentially be very useful.

As for my CDS project, that'll require a trip to my local Bloomberg terminal. I'll keep you posted.

No comments: