A new way to hedge gains in US real estate is being developed for large investors by MACRO Securities of New Jersey. The hedge, which is ...

A new way to hedge gains in US real estate is being developed for large investors by MACRO Securities of New Jersey. The hedge, which is based on US regional indexes of single-family home prices, comes at a time when local commentators are predicting that some of the huge gains seen in local markets may erode. The new product, similar to an index CFD, is based upon putting the investor's funds in US Treasury bonds and paying a "dividend" until the contracts expire. Investors who correctly bet on the direction of the regional housing index would get back their initial stake plus the cash value of any rise or fall in the index. The hedge uses Fiserv CSW's regional indexes which are broken down by US zip codes and are based on 30 years of so-called matched sales, the sale price of the same house. MACRO's new product will only be offered privately for the time being because the Securities and Exchange Commission has not yet approved plans for an American Stock Exchange listing. "Since many commercial banks have large exposures to the housing market through their mortgage portfolios, the ability to quickly tweak the size or direction of that bet would clearly be intriguing in risk management," said Bret Wilkerson, chief executive of Property & Portfolio Research, a Boston firm that advises clients on real estate.