The perilous thing about writing a blog, Jim, is that your words can come back to haunt you.

In last Thursday’s blog, you wrote:

“With the Dow down 40% this year, is it really a surprise that the driver of this downturn—real estate—could end up down 30%?”

Which is funny, because on August 20, 2007, you responded to my prediction that home prices could drop nationwide by saying:

“I guess it’s one thing to think of selected overheated markets (think New York 1970s) dropping 30%, but the real estate market overall—that’s hard to imagine.”

Hmmm…

So now you’re saying a 40% or 50% drop is in the offing?

I suppose it’s possible. The Citigroup disaster has me thinking that the economy could be a lot worse than people are anticipating. But home prices have come down a lot in places like Los Angeles, and with the impending inflationary overhang, it’s hard to imagine them falling another 10% or 15% between now and 2012, and staying there for four years. They might well drop that much, but I have to think they’ll make some kind of rebound over the next 48 months.

We’ll see.

At least we’ll soon have a way to bet on those price trends easily, assuming that the long-promised MacroShares Housing Price ETFs make it to market. Those funds will provide 200% exposure and -200% exposure to the S&P Case-Shiller National Home Price Index, so that people like you, Jim, can speculate on where home prices are going next.

Just … you know … make sure you’re not playing with the kids’ college funds.

Last 5 posts by Matt Hougan

• Long-Term Treasury Shorts? - July 16th, 2009
• Home Prices In 2014? Dead Flat From Here - June 30th, 2009
• Papering Over The Problem - June 16th, 2009
• What's Wrong With ETFs - June 15th, 2009
• A (Popular) ETF Down 97%??? - June 4th, 2009