Case-Shiller Home Price Index Down 18% – How To Invest

by Darwin on December 30, 2008

Today, the much anticipated S&P/Case-Shiller home price index was released, showing a 2.2% decline in October and an 18% decline from the year ago period. The S&P/Case-Shiller index is essentially the most widely utilized arbiter of the broad US housing climate, as it utilizes home price data from 20 major markets throughout the U.S.

Here’s how the index cities stacked up, in order of maximum pain:

 Phoenix, down 32.7%

Las Vegas, down 31.7%;

San Francisco, down 31%

Miami, down 29%
Los Angeles, down 27.9%
San Diego, down 26.7%
Detroit, down 20.4%
Tampa, down 19.8%
Washington, down 18.7%
Minneapolis, down 16.3%
Chicago, down 10.8%
Atlanta, down 10.5%
Seattle, down 10.2%
Portland, down 10.1%
New York, down 7.5%
Cleveland, down 6.2%
Boston, down 6%
Denver, down 5.2%
Charlotte, down 4.4%
Dallas, down 3%


How Do I Invest in the Case-Shiller Index?
Well, a few months ago, I had contacted a futures broker through the Macromarkets website and didn’t have much luck. He wasn’t very helpful and I think he viewed me as unsophisticated” (not rich) or something along those lines, so we never got anywhere. All I really wanted to do was to start selling futures out of the money increases in the index since I knew we had a long way down to go.
Today, I went back to the source and was encouraged to see that macromarkets has registered for two new exchange traded securities (presumably, similar to a “Case-Shiller ETF“), with tickers UMM for up and DMM for down. Here’s how they’ll work:
  •  Track 3 Times the percentage change in the 10-city S&P/Case-Shiller Home Price Index.
  • No minimum investment
  • Marginable
  • Backed by Treasuries and cash
  • Over ten years, virtually no correlation with stocks or bonds (both close to zero)
  • The Up and Down securities trade in pairs, so that’s how they balance the values diverging and still hold their value.

 Below, a snapshot of the market weightings in the securities:

Weightings by Metro Area

Weightings by Metro Area


UMM Fact Sheet

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{ 1 comment }

1 phoenix coupons March 17, 2010 at 2:58 am

Phoenix homes have depreciated 27% from their peak value in June 2006 according to my analysis of the Case-Shiller data.

Let’s say that another way that might paint a better picture for you; Phoenix homes were 36% more expensive in June 2006.

From the August 2007 mortgage meltdown to this latest data for March 2008, prices have fallen 20%, or almost 3% per month.

20% in 7 months. Wow!

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