how to hedge against real estate gain

Discussion in 'Trading' started by dozu888, Aug 11, 2002.

  1. dozu888


    On paper the house I bought 1.5 years ago has appreciated by 80k, per appraisal.

    Of course I don't want to sell the house now as I need a place to live in.

    How to hedge this gain? Is there some sort of LEAP puts for real estate ?

    If the real estate bubble bursts, I can see my house goes down in value but at least cash in on the hedge instrument.
  2. Short the homebuilders (TOL, PHE, LEN, CTX)
  3. Sell this one. Buy a fixerupper/foreclosure. You're hedged.

    (money can only rent happiness).
  4. trdrmac



    IYR is an ETF that tracks reits, that is the easiest way to play any breakdown. You could also look at individual reits that are breaking down, and especially at ones that start to lower payouts.

    You could also max out with a home equity line. Pay off any non-deductible debt, the HE loan interest is deductible. And then invest the money in an asset class that you think will outperform the loan. Although the later of this strategy caries some risk.
  5. Seems more logical than shorting homebuilders.
  6. dozu888


    to hedge against a $300k+ house, I need short a portfolio just as big... not realistic.

    home equity loan is not even relevent.
  7. better to hedge against <i>loss</i>. A gain is a good thing.