On May 19th, MacroMarkets released a survey of over 100 economists on their views of forward home prices. The survey can be accessed on the MacroMarkets website http://www.macromarkets.com/index.shtml by registered viewers.
While the headline “home prices will increase by 12.4% between 2010 and 2014″ may confirm a mildly bullish sentiment, as a market-maker I’m more interested in hearing from those who espoused outlier views. My hope is that they, or their clients who agree with them, might be looking for a way to express those views in the form of a trade.
I’d imagine that many of these economists are fans of efficient markets and transparancy. I’d imagine that while many appreciate the survey, that they would also like some market-derived forward price on home prices to help them with the rest of their economic projections. My sense is that the CME Home Price futures contract can be that resource -once liquidity increases. Right now the contracts face the classic “chicken-and-egg” syndrome. The bid/asked spread is wide because liquidity is low, and liquidity is low because the bid/asked spread is wide. Getting some small trading started in the 2012-’14 maturities might help improve the bid/asked spreads and break this syndrome.
In the meantime, kudos to MacroMarkets on an extensive survey!