HPHF_CLT.pdf

Welcome to Home Price Hedging Fund ("HPHF"). At a high level HPHF was created to facilitate hedging of home price indices that are not referenced by CME contracts under Home Price Index Agreements. Details of the fund can be found in this blog, or in the Resources section below (under construction).

* HPHF OTC Agreements will be structured to focus interest in any index, on one expiration -typically the index referencing year-end index values.
* While Agreements may be referfed to as "Forwards" they will be structured so that parties can be long either a deep-in-the-money Call or Put. (As such no user will have a short position -although puts might trade similar to a short position.
* Users must first submit account opening forms.
* Agreements will have bounded ranges of outcomes -typically set at +/-10% of an estimate of forward index levels.
* Auctions for Agreements may take place when sufficient interest arises from both sides.
* Absent demand for an auction, HPHF may take counter-party role. (Expected to be the case for first agreements.)
* See Trading Axes sections for pending inquiries, or suggest regions that you'd like to discuss (via Contact link).
* While my intent is to facilitate forward agreements, HPHF is also willing to enter OTC options. See Options page for trading axes
* Agreements (Forwards and Options) cannot be exercised before expiration. Trading out of a position back to HPHF is allowed, but liquidity is not guaranteed. All Agreements will auto-exercised at maturity.
* Users must read and sign Risk Disclosure form (under construction) before doing any trades.

July 3: Trading axes updated to include a table of 2nd 10 Case Shiller referenced geographic areas (Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland, Seattle, and Tampa), but referencing Freddie Mac indices.

June 30: I've been trying to post a "City of the Day" on Tweeter. It's been a mix of CME contracts (BOS, CHI, DEN, LAV, LAX, MIA, NYM, SDG, SFR and WDC) as well as Case Shiller "2nd 10" (but done using Freddie index) as well as others -e.g. Pittsburgh, Nashville, Salt Lake. Please contact me if you'd like to see any other cities (of the >300 with Freddie Mac index) posted.

June 25: I've conceded that hedgers want protection beyond Jan 2020 so going forward Twitter posts (@HomePriceFuture) will show agreements for two expirations: one for year-end 2019 values, and one for year-end 2020. I'm not posting definitive expirations in my tweets as Freddie Mac numbers for Dec 2019 may not be available until after Jan. 31.

May 1: I've added a monthly changes table for the Case Shiller "2nd 10" regions. These prices will supersede any earlier posted prices. Note that bid/ask spreads are relatively tight as I want to get of couple of agreements started to test the HPHF process. Also, notional values are $100/point (instead of $250/point for CME contracts). None done yet, but eager to start.

April 23: I've added a number of two-sided indications to where I'd "test the water" on small agreements. My preference is to be responsive to inquiries, so please contact me with areas where you might have interest in an agreement.

Mar 24. I  would like to start with a few cities where either volatility has been high, where price levels have changed, where there is a local platform to debate forward home prices (e.g. news reporter/ blogging platform), or (most importantly) where I've had an inquiry from a reader.

The following cities make the first cut: Atlanta, Charlotte, Minneapolis, Nashville, Salt Lake, San Antonio, and Seattle (for both Forwards and Options). Please see Trading Axe link below for details (e.g. buyer/seller, index), and please post requests for consideration of Agreements for other regions in the Contacts section.