Fri, 03 Jun 2005

Shorting Real Estate

It looks like we're one step closer to being able to short real estate. There's a company called HedgeStreet (Via The Big Picture) which allows trading futures on housing prices and mortgage rates. It's not quite the same as shorting a house as there's no underlying asset being bought and sold, nor even an option on an underlying asset; rather, it's basically a bet on which way prices (or rates) will go.

The web site is terribly slow so I haven't read all of the details. If it gets significant volume, it may become a valuable tool for predicting future prices, as markets seem to be pretty good at this type of thing.

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The state is that great fiction by which everyone tries to live at the expense of everyone else. - Frederic Bastiat