Housing Derivatives

Jonathan Keehner of Reuters has an interesting (and cleverly titled) item on the rise of housing-related derivatives. Here's the premise:

While investors in nearly all other major asset classes enjoy the utility of a derivatives market, often to hedge their risk, those in fragmented and opaque U.S. real estate markets largely have not.

But access to real estate indexes is adding U.S. commercial and residential property ownership to the list of items, from companies' debtworthiness to the weather, that investors can speculate on through listed and over-the-counter markets.

Given the incredibly rapid expansion of derivatives markets over the last several years, this is hardly surprising.

Source

Jonathan Keehner, "The Futures of Real Estate," Reuters, April 4, 2007