The Global Home
Homes are the most local of investments, rooted to a particular place like a tree, and thus thriving or withering in response to local economic conditions. The whole world flashes by on our television screens, but the market for our homes, which is comprised almost entirely of local amateurs, remains grounded right there in our own backyard.
Soon, however, this could all change. Within a month, the Chicago Mercantile Exchange (CME), in collaboration with my company, MacroMarkets, as well as Fiserv and Standard & Poor’s, will launch futures and options contracts on home prices in ten cities in the United States. The contracts will be settled on the S&P/Case-Shiller Home Price Indices, which developed out of academic work that my colleague Karl Case and I pioneered almost twenty years ago. For many years we have been campaigning for housing futures, but no exchange wanted to use such indices to create a futures market until now.
The futures markets on home prices will allow investors around the world to invest in US homes indirectly, by buying interests in them through these markets. An investor in Paris, Rio de Janeiro, or Tokyo will be able to invest in owner-occupied homes in New York, Los Angeles, and Las Vegas.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
Already have an account or want to create one? Log in