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justme
2010 Nov 2, 1:07am
USDA....Jones Farm, Oregon....Moooo! :-) :-)
I didn't know USDA made home loans, were you looking for some other four-letter acronym?
justme
2010 Nov 2, 1:29am
But seriously, does not C-S index allow trading futures against the index values?
C-S may not have the granularity of Intel sites such as Jones Farm, OR or Santa Clara, CA, but still...
Dude, didn't you get the memo? Housing is a hedge. Put nothing down, and if we see massive deflation you walk away with no further obligation. Hyperinflation, and you get the house free.
I guess the real question is: If you're not putting anything down (or you're doing a 3.5 FHA loan), why would you care about hedging against further price declines?
maxweber
2010 Nov 3, 11:14pm
USDA regions have $0 down for under $73K or something in income. That's what the USDA is about. Not sure about Jones Farm but some parts of growing cities like Charlotte are still classified USDA because its only re-districted every 10 years or something.
Walking away is not a good hedge due to credit issue.
What is a good hedge on housing? E.g. a USDA borrower can put nothing down. Say they put down $1K on a $100K house, then they have 100x leverage with a maintenance cost. How can they hedge this? Each neighborhood is local but in general houses loose value over time. Some neighborhoods can go up of course.
It seems the ideal hedge would be a derivative based on their city or area of the city. If it prospers then the house value will rise. If not, it will drop. Since most people work near where they live then the person is doubly risky.
So, is there any sort of derivative on the local economy where your house is? I guess if you're in Jones Farm, OR then you just do puts on INTC or something. ???
#housing