Gary Lucido's  Instablog

As of last Tuesday there is a way to trade houses just like you would stocks – sort of. A company called MacroMarkets has created two instruments that allow people to take positions that bet on the price of houses going up or down in 10 markets that comprise the Case Shiller 10 City Composite Index. The motivation for creating these instruments (aside from MacroMarkets collecting fees) was to permit homeowners to hedge their exposure to housing prices. These instruments are similar to ETFs in that they trade on the exchanges and their value is (loosely) tied to an index value, that being the 10 City Composite Index. The way MacroMarkets created these instruments is that they deposited money into two trusts – one of which represents an interest in the underlying index going up and the other representing an interest in the underlying index going down. Under the terms of the trusts, assets are passed back and forth between the trusts based upon whether the index goes up or down – i.e. when the index moves up money is transferred from the down trust to the up trust. Macromarkets then issued shares in each of the trusts – the MacroShares Major Metro Housing Up shares trade under the symbol UMM and the MacroShares Major Metro Housing Down shares trade under DMM.