Given the local economy, it somewhat surprises me that no one in LAV has chosen to use the CME platform to place a “bet” on where the LAV index might be in the future. (i.e. open interest = zero).
I crossed paths with John McCelland (an LAV blogger/ researcher/ real estate person) who has put together a very comprehensive 17-page report on the rental dynamics in the LAV market that he has allowed me to post. The report cites the CME LAV futures in a graph on page 3 (so I’m already a fan) but then also has tons of detail on multiple home price metrics. I’d encourage anyone looking to trade the LAV contracts to review this report and to follow John’s blog.
I promised John that if he let me post his report that I’d tighten up the LAV quotes. I’ve not focused on LAV (as I noted, there’s been little interest) so any help would be appreciated. LAV appears to already be priced with gains above the CUS10 market. How much better might LAV perform than other regions?
If you’d like to start a discussion of relative value in the LAV markets, or discuss any aspect of hedging home prices, please feel free to contact me (firstname.lastname@example.org).