Investors expect the average price of a home in the U.S. in August 2014 to be virtually identical to where prices are today.

We know that by looking at the new MacroShares Major Metro Housing Up (NYSE: UMM) and MacroShares Major Metro Housing Down (NYSE: DMM) products, which began trading on the New York Stock Exchange this morning. We covered the launch here.

As of 10:02 a.m. EDT this morning, UMM was trading for $20.13 per share and DMM was trading for $30.97 per share. So how does that translate into a flat market over the next five years?

Here’s how the math works:

The new products are designed to provide 300% and -300% of the return of the S&P/Case-Shiller Home Price 10 Index, the leading measure of national home prices. But they are not designed to track those changes on a day-to-day basis; rather, they are designed to track the total performance change from December 31, 2008, through August 31, 2014.

The net asset value of each product was $25 a share based on the December 31, 2008, reading of the index. At that time, the index level was 162.17.

With DMM trading for $30.97 a share, investors are anticipating a $5.97-per-share change in the NAV through August 31, 2014. That translates into a 23.9% increase in the value of DMM.

Remember, though, that the product offers triple leverage; that 23.9% increase in DMM reflects a fall of just 8.0% in the index. Using the 162.17 base, that means investors expect the index to hit 149.2 by August 2014.

That’s interesting, because Standard & Poor’s just released the April 2009 data for the S&P/Case-Shiller Home Price Indices. Overall, the data showed a continued but moderating decline in national home prices. But from our perspective, the most interesting piece of information was the April 2009 reading of the S&P/Case-Shiller Home Price 10 Index: 150.34.

In other words, based on the early trading in UMM and DMM, investors expect home prices in August 2014 to be almost exactly where they were in April 2009. To put a needle on it, they expect prices to fall 0.76%.

That’s not to say home prices will be flat in the interim. The S&P report shows that homes lost value in April at an astonishing 18% year-over-year clip. That’s not going to arrest itself overnight. Most likely, investors expect home prices will dip further before staging a recovery as we approach the 2014 deadline.

I personally wonder if that’s not a little too sanguine. As I’ve said before, when bubbles burst, they tend to overreact on the downside just as they overinflated on the upside. I don’t think we’ve seen that in home prices yet. And with the prospect for higher interest rates, it could be a while before we see housing recover.

Then again, a reading of 149.2 puts national home prices back where they were in June 2003. If that’s where we are in August 2014, it will mean 10 years of flat home prices for the U.S. Adjust even for nominal inflation, and “real” home prices will be down significantly.

Last 5 posts by Matt Hougan

• Long-Term Treasury Shorts? - July 16th, 2009
• Papering Over The Problem - June 16th, 2009
• What's Wrong With ETFs - June 15th, 2009
• A (Popular) ETF Down 97%??? - June 4th, 2009
• Poppycock, Wiandt - June 2nd, 2009