Yesterday's NY Times included "The Pork-Bellies Approach to Housing" which described the marketing of the Case-Shiller house-price indices as housing market hedges.
The indices are metro-area specific and, therefore, limited. "When pressed on this, Shiller and Masucci observed that metro-level price changes do explain roughly half the variation in price for a typical house. Whether that's good enough for hedging purposes remains to be seen."
As with any hedge and/or insurance, it's not for everyone but the fact that is is now available (and selling) says a lot. There is lots wrong with housing markets and how they are treated by tax and zoning laws. Given all of this, the availability of these new opportunities is good news even if we stay on the sidelines.
We may get fewer interest rate jitters, less bubble talk (and possibly fewer bubbles), as well as thicker and better informed markets.