The problem is that based on today’s futures prices on the CME, The November 2011 contract for San Diego prices is priced at 16.5% below todays prices.
To make money you would need to bet on a further downside than that. We already have about 12% off nominal prices. The projection would make it a total of about 30% decline in nominal prices. Add to that the effects of inflation from 2005 to 2011 (another 18-21% or so) and you get a 50% decline in real home prices.
I think it’s quite risky to bet on more than a 50% real price decline.
Now, as for hedging against a purchase, the problem is similar. Since the futures market is pricing in 16% declines over the next 4 years. Trying to produce a product that ensures 0% decline in that kind of environment would be quite expensive.
