Can You Insure Against Home Price Decline? Futures contracts would back policies to protect homeowners if bubble bursts
Home-equity insuranceprotecting against declines in home pricescould be the next big product in the property-casualty sector, according to a firm developing the first such coverage.
Macro Securities Research, a Morristown, N.J.-based financial research firm, is working with the Chicago Mercantile Exchange, the largest futures facility in the United States, to create futures contracts tied to U.S. housing pricesthe first of their kind in the countrywhich big investors could buy to hedge against the potential of housing prices falling in the future.
Essentially, these big investors could buy such futures contracts as a bet that the housing prices in certain geographic areas will be lower at a certain time in the future when the contracts expire. If the housing price remains steady or goes up, the contract would be worthless, but if the price goes down, the buyer would make money from the transaction.
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