Want to invest in home values without actually buying houses?

Well, starting later this month, you'll be able to do precisely that by buying into New York Stock Exchange-traded funds tied to the movement of house prices - up or down - in major metropolitan real estate markets.

They're called "Macro shares," and their values will move based on home prices as measured by the Standard & Poor's/Case-Shiller index. If you think house prices in 10 key markets are likely to decline over the next several years, you can buy "down" Macro shares from your stock broker.

On the other hand, if you believe that values are likely to rise, you can buy "up" Macros.

The cost of a Macro share at any given time will depend on investor demand for either "up" or "down" indexed shares. So, if more investors believe house prices are likely to decline at any given time, the "down" Macro is likely to trade at a premium -- it'll cost more than the "up" Macro.

For example, you might buy a "down" Macro this month for $30 but two years from now, assuming the Case/Shiller house price index drops, it might be worth $40. Or, if the index rises, your "down" Macro might only be worth $25.

The ten metropolitan areas the index will track for the Macro funds are: Los Angeles, San Diego, San Francisco, New York, Miami, Las Vegas, Denver, Chicago, Boston and Washington DC. The money you pay to buy shares is invested in short-term Treasury securities or income-earning deposits. Interest income pays for administration of the funds and may even yield dividends for Macro holders.

Macro Markets LLC is the sponsor of the exchange-traded program. Macro was founded by Yale economics professor Robert Shiller and Carl Case, economics professor at Wellesley College. Both were also prime developers of the Case-Shiller home price index methodology that is widely cited to gauge home value movements.

What are some of the potential uses of this first-of-its-kind exchange-traded fund? Basically the idea is to allow investors - big and small - to play the real estate market without having to own, finance or manage real estate.

You can profit even if values plummet, as long as you own "down" Macro shares.

You can get a good feel for the Macro concept -- pros and cons -- by visiting the website at and walking through the prospectus and key information there.

Is this for everybody? Absolutely not. You can definitely lose money if you bet wrong.

Then again, you can reap profits from houses -- without owning any.

Published: May 8, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.