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How to Short a House

Posted By Barry Ritholtz On June 2, 2005 @ 9:54 am In Real Estate,Trading | Comments Disabled

One of the comments that came up repeatedly on the Housing is Not a Bubble [1] column was the assertion that "You cannot short a house." As in the stock market, the lack of "informed short selling pressure" removed a source of supply that theoretically) would dampen price rises.

Only now, it turns out to be no longer true.

Michael Covel, author of Trend Following [2], points us to Hedge Street [3], where you can select distinct cities to short median home prices on a regional basis:

Los Angeles
New York
San Diego
San Francisco

These new Housing Price "Hedgelets" [4] are benchmarked against the National Association of Realtors reported median sales price of existing single-family homes in the cities mentioned above. There’s also a hedge which can be put on on 1-yr ARM or 30-yr FRM Mortgage.

So now you can sell a region of Homes short . . .  just not individual houses.

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2005/06/how-to-short-a-house/

URLs in this post:

[1] Housing is Not a Bubble: http://biz.yahoo.com/ts/050526/10225437.html?.v=3

[2] Trend Following: http://www.amazon.com/exec/obidos/ASIN/0131446037/thebigpictu09-20

[3] Hedge Street: http://www.hedgestreet.com

[4] "Hedgelets": http://www.hedgestreet.com/hedgelets/selectasset.html

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