Down payment hedging

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Submitted by ralphaze on August 28, 2008 - 4:48am

Down payment hedging

I want to buy a house in Houston or Dallas a year from now. I have the money for the down payment right now, but other circumstances keep me from buying the house now.

I have a gut feeling that housing prices will go up in Houston or Dallas this coming year, while it will continue to decline in other US markets.

I would like to hedge my down payment money, but I am not sure how to do it. I’ve looked into some REITs, but all of them seem to have an overly diversified portfolio with investments in markets about which I don’t really have a good gut feeling.

Does anyone have any idea how can I do this hedging?

Thanks

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If it's Houston you're
Submitted by peterb on August 28, 2008 - 9:13am.

If it's Houston you're interested in, I would go with oil. Since I think that's what's kicking the place in gear right now. Besides, oil is probably the best bet right now for almost any investment.

I agree with peterb on this
Submitted by FormerSanDiegan on August 28, 2008 - 9:23am.

I agree with peterb on this one. Although I would not expect a huge spike in prices in either Dallas or Houston, your best bet for hedging against one is oil, (more so for Houston than Dallas).

But in reality, I would not expect anything more than 5% price increases in these areas for typical starter homes.

I've heard the TX in general
Submitted by peterb on August 28, 2008 - 9:28am.

I've heard the TX in general did not experience much, if any, RE bubble in the last 5 years. So, you're probably pretty safe in regards to RE price hikes...especially in light of what's going on with funding aspect of RE at this time.
I've heard Alaska is doing quite well these days, too. Gotta love those natural resources.

You could buy raw land or
Submitted by EconProf on August 28, 2008 - 3:02pm.

You could buy raw land or lots in the path of development.
Land and lots usually move in the same direction as house prices, except more. Witness the plunging lot prices in the inland empire.
Advantages compared to a house: no tenant problems, maintenance, etc. Disadvantage: Texas has high property taxes.
Not clear from your question whether you'd move there or not. Owning & managing from afar is seldom a good idea.

I think moving forward that
Submitted by Raybyrnes on August 30, 2008 - 2:19pm.

I think moving forward that Natural gas is going to have longterm upside.

ROSE Rosetta Resources

delete
Submitted by Raybyrnes on August 30, 2008 - 2:19pm.

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