3 ms·
That instrument would be far more useful on the short side - someone with a house in SF likely wants to limit their exposure to idiosyncratic SF-only housing pr
by ThrustVectoring 9y ago
That instrument would be far more useful on the short side - someone with a house in SF likely wants to limit their exposure to idiosyncratic SF-only housing price risk.
- gnode 9y agoIt works both ways. This is essentially what happened in The Big Short, although for profit, rather than hedging. You can purchase naked credit default swap options, whereby the issuer with insure debt which you don't own against default. This comes with some obvious criticism, much like taking out insurance for someone else's house.
- ThrustVectoring 9y agoAlso, probably the mechanism of choice would be likely be opening up a cash-settled futures market on a housing price index.
- closeparen 9y agoIt could be reasonable to save up for a down payment in an investment vehicle that moves with the size of the down payment needed.