If You're Worried the Value of Your Home is Going to Collapse, There are New Ways to Protect Yourself

If You're Worried the Value of Your Home Is Going to Collapse, There Are New Ways to Protect Yourself

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If you believe you are living in a housing bubble and are scared to death of falling prices, their are options on the internet to save your tail.

Most people dream of ways to eliminate risk from their lives. While risk will always be around, there is a new spot on the internet to lessen your financial danger. A website called HedgeStreet lets people bet on the rise and fall of housing, and commodities such as gasoline and soybeans.

For years, large companies have used the futures markets to protect themselves against price swings in the marketplace. Now homeowners can do the same. HedgeStreet describes itself as 'a person-to-person marketplace where you can speculate on economic events such as the price of gas, gold, housing, and much more.'

How HedgeStreet Works

With HedgeStreet, a homeowner worried of a bubble can place a bet that housing prices will fall. If he is right, his home loses value, but his bet will earns money. If prices rise, his home gains, but his bet loses.

The contracts from HedgeStreet, known as Hedgelets, range in price of up to $10 each. The housing contracts are available for six metropolitan areas: Chicago, Los Angeles, Miami, New York, San Diego, and San Francisco.

According to the San Francisco Chronicle, the contracts work like this: Hedgelets are sold based on the median home price during a quarter. Fox example, in the second quarter of this year the median home price in San Francisco was $726,900. HedgeStreet set the third quarter contract at $729,000. If you believe the median price will come in higher, you buy a yes contract, for a fluctuating market price between $0-10. Say it costs you $5.50. If you are right, the contract is worth $10 and you profit the difference. It you are wrong, the contract is worth $0 and you lose.

HedgeStreet charges $1.50 for purchasing up to 30 contracts, and five cents per each additional Hedgelet. Speculators can pick their market: currencies, commodities, fuel, housing. The site provides research, quotes, and charts and a trading simulator, so you can test your skills without risking anything.

For a step-by-step tutorial of the process, visit www.hedgestreet.com, or for more information on hedging visit www.sfgate.com.

The author, Eddie Daroza, is a personal investor and stock market junkie. Besides contributing content to efinancedirectory, he works on the financial news show Rob Black and Your Money, broadcast daily on San Francisco's KRON 4. Eddie is reporter for PBS' Update News. He studies Business and Journalism at San Jose State University.

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