MacroMarkets Home Price Indexes

MacroMarkets offers some of the most sophisticated housing market indexes in the world. The numbers are based on rather complex formulations.
From their site:

“In May 2006, in partnership with MacroMarkets, the Chicago Mercantile Exchange (CME) successfully launched Housing Futures and Options for U.S. residential real estate. This landmark development created the first exchange-traded financial products for directly investing in and hedging U.S. housing.”

The five-year Miami-Dade Home Price Index (based on U.S. Census Bureau MSAs):

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5 Comments

Filed under Urban Tech

5 responses to “MacroMarkets Home Price Indexes

  1. FechyMiami

    Futures market aren’t liquid enough to a a precise indication but it sure can give an idea of direction to the general investor.

    Movements are exagerated in the futures market because of the wide bid ask spread they give you

  2. FechyMiami

    What has been interesting is the development of property derivatives which developers and commercial property funds can use to hedge or to rebalance positions in the over the counter market

  3. Sounds like you’re an analyst FM. You could probably write a critique. I’d read it.

  4. FrenchyMiami

    Commercial property is an asset class where many people have strong views. Accessing this market is very costly, with stamp duty fees at 4% and other costs adding another couple of hundred basis points. Also unless you own a building or portfolio, until now there has not been a way to effectively short commercial property (if you take the view the market is declining).

    The only way to avoid these issues is through indirect means. Current tools do not offer a highly correlated method for accessing or shorting exposure. For example baskets of Propco stocks or REITS act more like an equity as opposed to effectively tracking Real Estate returns. In addition, most other indirect tools also require upfront premiums or principle.

    Today with the use of a Total Return Swaps you can take a view and synthetically receive or sell the relevant exposure.

    sorry had my name spelled wrong..i m more of an investment banker

  5. FrenchyMiami

    a significant market for property derivatives has developed in the UK in the past couple of years, with a trade volume of 7.6 billion pounds sterling at the beginning of 2007, six times higher than at the end of 2005. The growth in trade can be explained by the wide range of property derivatives, their functions that differ from other real estate-investment instruments and the advantages for private investors that they generate.
    The researchers believe that this market development is likely to be followed in continental Europe, mainly in the Netherlands, France, Ireland, Spain, Sweden and, to a lesser extent, Germany. Just and Feil believe this is the result of availability of a suitable property index with sufficient data history and experience with capital market vehicles in connection with property deals in these countries. Furthermore, high transaction costs and downwards price corrections are favourable conditions for market development, according to the Deutsche Bank researchers.

    They conclude there are very strong indications that property derivatives will establish themselves as a new capital-market-oriented property instruments. The market can be expected to expand vigorously over the next few years

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