A New Proposal to Stabilize the Housing Market

Economists are good at generating new ideas.  Here  is a new one served up by UC Berkeley's Prof. Wilcox.  He wants government to insure people's downpayment on a home.   For a small upfront fee, a new home buyer would receive a check from the government if local home prices fall two years after a buyer purchases.

An economist might ask why people can't opt into this market by shorting the Case-Shiller index for their own city.   It is true that the Case-Shiller index doesn't exist for every city but if there was sufficient demand for this product then I don't know why the Case-Shiller futures index doesn't already exist for every city.

Comments

[Meijun Zhang]

http://www.cheapswtorcredits.net/
It is true that the Case-Shiller index doesn't exist for every city but if there was sufficient demand for this product then I don't know why the Case-Shiller futures index doesn't already exist for every city.

[A Facebook User]

The biggest risk in any long term real estate purchase (in my opinion)is always interest rate risk. As interest rates rise, home values drop. It is pretty much a forgone conclusion that interest rates cannot go much (if any) lower than they are now, so there is good reason for people to be wary. Might it be possible to use a derivative of interest rates (tied to the prime rate or LIBOR) instead of the Case-Schiller index? I say this a little hesitantly, since I realize the role that derivatives played in our current economic situation.
http://www.valleyoregonhomes.com

[Hendri Prastio Kurniawan]

wow An economist might ask why people can't opt into this market by shorting the Case-Shiller index for their own city. It is true that the Case-Shiller index doesn't exist for every city but if there was sufficient demand for this product then I don't know why the Case-Shiller futures index doesn't already exist for every city.
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