Housing futures to allay bubble fears
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What attracts both camps? Day-to-day market volatility -- something that skeptics claim U.S. housing markets just don't have, localized bubbles notwithstanding.

"What's the information that's going to come between today and tomorrow, or tomorrow and the next day, that is going to lead you to change what you think houses are worth in Chicago or San Diego? Probably not much," Pirrong says.

"There's also a chicken-and-the-egg side to this in that nobody wants to trade until a bunch of other people trade. Who's going to be the first one into this market? It takes time to build that critical mass of people, and given the nature of this product, that may be a very daunting challenge."

Home equity insurance
Then again, Case-Shiller Home Price Index co-developer Robert Shiller says that regardless of how investors initially respond to housing futures, just establishing the exchange is an important step toward the ultimate goal: home equity insurance. Shiller, whose book "Irrational Exuberance" predicted the 2000 stock market tumble, has spent years advocating home equity insurance, pointing out that homeowners currently bear the entire risk, should their houses decline in value.

"The risk-management institutions have to keep up to date on what risks are important," he says. "A hundred years ago, fire was a very important risk because they didn't have building codes at all and they were lighting their homes with candles and oil lamps which are fire hazards. The hazard today is price risk."

He hopes the housing futures market will also give large insurers a way to hedge the risk of offering home equity insurance.

"Once we have a futures market, then people can develop home equity insurance and mortgage products that protect the equity in the home and they in turn can then use the futures market to hedge the risk they assume by creating these products."

While it may be years before the verdict is in on the worth of housing futures, Altfest says there's enough uncertainty about the real estate bubble to make it an attractive option for some investors.

"Real estate itself may not go down materially -- the Federal Reserve certainly doesn't want it to go down -- but there is no question that you're not going to make a lot of money in real estate from now and going forward. And it's likely to decline -- if not absolutely, then in real terms."

Jay MacDonald is a contributing editor based in Mississippi.