Make Money while Phoenix AZ real estate declines in value

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Most people are suffering as a result of a decline in Phoenix AZ real estate. In fact today, according to RealtyTrac, More than 300,000 U.S. homes received at least one foreclosure-related notice in Jan, an increase of 5 percent over the year before. The number of homeowners caught in the wave of foreclosures in October grew 25 percent nationally.

Is there a way to make money while Phoenix AZ real estate prices continue to decline?  The answer is yes. Well , indirectly.

About 2 years ago, the Chicago Mercantile Exchange (think New York Stock Exchange for commodities) started trading futures contracts on” index-based housing price futures and options on futures based on indexes depicting matched sales prices for single family residential dwellings in 10 different U.S. cities.

Investors can trade contracts based on an index of median home prices in the metropolitan areas of Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, or Washington, D.C. or in a composite index of all 10 cities.”

Although, this type of Wall Street investing is slightly complicated, I will try to explain.

Please note, * I am not a licensed investment adviser. * I am not making an investment recommendation. * This type of investing contains a high degree of risk. * Please consult with your Attorney, CPA and registered investment advisers before trading in stocks and futures.

If you are a real estate investor and believe that home prices are going to go higher in the future and want to participate in the rise you can always buy a home.

Let’s say you cannot afford a home or do not want to invest that type of money. You can buy futures (commodity contracts) on a composite index of all 10 cities or a specific city that you are optimistic about. The contrary is also possible. If you are negative and believe housing prices are going to continue to decline, you can ’sell’ futures that will increase in value if home prices drop in those cities.

These financial instruments were designed for hedging real estate investing, not speculating. Though, real estate futures can be used for both. A hedge is a way that you can buy insurance in case your investment works against you.

For example, a builder is planning on building homes in a subdivision. It can take more than a year for the homes to be completed and sold by the developer. If the new home builder wants to protect against a price decline during that time-frame, they can invest that the home prices in that region will decline. Thus, if home prices decline, they can make up some of the difference in profiting on the futures commodities contract.

If home prices increase the builder will realize that profit when the homes are sold at the current or increased market value. Again, this type of investing is not for most people.

I am not recommending that you buy and sell options, futures or stocks. Make sure you only take investment advice from a licensed investment representative.




Copyright © James Wexler *Make Money while Phoenix AZ real estate declines in value*

If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.

Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales


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Larry Bettag
Larry Bettag - Cherry Creek Mortgage - Saint Charles, IL
Regional Vice-President unique.  I really would never have tought of this element even existing.  But having this in the current a revenue tool.....good for those who have those capabilities.

Feb 21, 2009 05:34 AM #1
technomart webmaster

wow wow i really would never have though of this element even existing.......

Feb 23, 2009 11:18 PM #2
Jim Frimmer
HomeSmart Realty West - San Diego, CA
Realtor & CDPE, Mission Valley specialist

That's pretty interesting, although it doesn't surprise me that one can do that. I figure if a pianist can insure one's fingers and toes, I figure there's something for everyone out there, and if there's not, go ahead and be the entrepreneur who gets it started.

Feb 28, 2009 11:39 AM #3
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