A 30-year perspective on property derivatives: what can be done to tame property price risk?

Fabozzi, F. J., Shiller, R. J. and Tunaru, R. S. (2020) A 30-year perspective on property derivatives: what can be done to tame property price risk? Journal of Economic Perspectives, 34 (4). pp. 121-145. ISSN 1944-7965 doi: 10.1257/jep.34.4.121

Abstract/Summary

The housing sector is the largest spot market in the world without a developed derivative contract to serve the risk management needs of market participants. This paper describes the evolution within a wider economic context of property derivatives in the United States and worldwide. We review various economic arguments presented in the literature to highlight the advantages of these financial instruments to society. The paper also provides a critical perspective on the principal obstacles hindering the development of property derivatives based on real estate prices—especially housing prices—and what can be done to overcome these difficulties. The issues discussed can serve as a guide for designing property derivatives capable of hedging real estate risk that has resurfaced time and time again in financial crises.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/118431
Identification Number/DOI	10.1257/jep.34.4.121
Refereed	Yes
Divisions	No Reading authors. Back catalogue items Henley Business School > Finance and Accounting
Publisher	American Economic Association
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