Q: Are there ways for investors to invest in real estate using the popular Case-Shiller Home Price indexes?

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  By Paul Sakuma, AP

  A new price sign hangs near a home for sale in Palo Alto, Calif.

By Paul Sakuma, AP

A new price sign hangs near a home for sale in Palo Alto, Calif.

A: Investors who are wondering how housing prices are doing often pay close attention to the Case-Shiller Home Price indexes.

These indexes tell investors and others interested in home prices what’s going on in 20 major cities in the U.S. There are also composite indexes that examine the broad nationwide trends in home prices. Chances are when you hear that home prices have risen or fallen, you’re probably seeing data based on these indexes.

When the indexes first debuted, they weren’t the easiest financial instruments for investors to buy and sell. Since these indexes, created with the help of Standard Poor’s, were created as futures investments, investors needed to have a futures account and familiarity with this less mainstream market to bet for and against real estate. You can still invest in these indexes using the futures market.

Things got easier, but only briefly. MacroMarkets, a provider of exchange-traded funds, created two Case Shiller index ETFs, which allowed investors to bet for or against the real estate market by just buying an ETF. An ETF is a stock that moves up and down along with the value of underlying assets or indexes. But these ETFs didn’t last long and were closed down in 2009 after only being around for a year.

You can still invest in real estate in your brokerage account. There are a variety of mutual funds and ETFs that invest in real-estate investment trusts, or REITs. These investments can be a great addition to most investors’ portfolios.

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But as you’re probably aware, REITs are not a perfect substitute for investing in the Case Shiller indexes.

The Case Shiller indexes monitor the direction of the housing market. REITs, on the other hand, monitor the value largely of commercial real estate like apartment buildings, offices and shopping centers.

But until the time someone else tries to create Case Shiller ETFs, you are left either investing in REITs or playing the futures market.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz

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