I will sell, the right, but not the obligation, to buy my 568 sq foot condo, in one of the most central places in Toronto, for $275K, in 3 years from today, in exchange for $21K in cash today.  Considering futures (pre-sales for 2011) are selling for approximately $300K today, it may or may not, be a good deal.

I will also buy, the right, but not the obligation to force the sale upon somebody, for $240K, in exchange for me paying them $2K.  This may be worth it to you – is it? 

This $21K, and $2K, is derived from my intrinsic expectations for what the market could potentially do, as well as a binomial method.  In the first case, the money is worth more to me to have the cash, rather than the potential.  And in the later, the $2K worth of insurance, is worth it. 

Measuring the implied volatility, this is works out to 7.5%.  Way cheaper, than any stock which usually clips between 25% and 45%, and it’s not rare to see IV approach the double digits on say – a pharmaceutical company, where perhaps the implied volatility is in fact worth it.

Before you comment, you must understand, that this is an offer, it is the bidders responsibility to assess the value for themselves.  That is, REALIZE: the market is not guaranteed to move in ANY direction, or ANY magnitude.  If you think it is – slap yourself.

I found the Trulia housing heat map helpful, which accompanied this list of average listing price of homes, for the entire STATE’s real estate listings:

Hawaii $935,452
Wyoming $859,654
New York $761,945
California $702,176
District Of Columbia $681,335
Connecticut $643,126
Colorado $569,900
New Jersey $521,040
Massachusetts $495,533
Nevada $489,991
Utah $489,021
Montana $487,482
Rhode Island $478,896
Washington $455,489
Maryland $450,270
Florida $425,327
Arizona $424,785
Oregon $413,585
Virginia $407,792
Vermont $402,066
Delaware $398,884
Idaho $388,361
New Mexico $387,137
New Hampshire $377,144
Illinois $367,713
South Carolina $355,848
North Carolina $351,462
Alaska $340,727
Maine $325,733
Georgia $319,859
Minnesota $309,031
Pennsylvania $294,639
Texas $285,073
Tennessee $272,868
Alabama $268,668
Louisiana $256,966
South Dakota $253,015
Wisconsin $249,835
Arkansas $232,074
Missouri $230,284
Mississippi $230,016
Michigan $228,748
West Virginia $227,085
Kansas $225,135
Kentucky $218,949
Indiana $204,482
Ohio $203,996
Oklahoma $197,696
Iowa $195,452
Nebraska $194,217
North Dakota $182,284

Average price for a home in Toronto (notice it’s a major city center as opposed to the prices above which are for entire states), was forecasted to average $394K for 2008 (written just a few months ago) in a report by the CHMC.  In the same report it is forcasted 2.5% YoY appreciation ‘08 to ‘09…the slowest appreciation since 1996.

For sake of reference.  Density of the entire district of columbia is about 3.6 people / m^2 where as Toronto, it’s 3.9 people / m^2.

But…we have our silly (yes that’s sarcasm) 25% down or mandatory insurance policy known as CMHC. The government just made it a little more strict by forcing 5% down and maximum amortization of 35 years.

AND…Here’s why Canada should be okay…

Canadian Cities
Average House Prices
November 2007

Canadian Provinces
Average House Prices
November 2007

 I also found this link to the NYTimes Real Estate listings search helpful, and american’s might find the MLS listings helpful.

Disclosure: Long Toronto & CANADA!

The present value of a lesson learned is infinite.

I’m jumping on the bandwagon with the teachings of two different millionaires I know…a Hawaiian and Albertan Real Estate success story and a trend following entrepreneurial VC fund runner.  Both buy the tops in the markets they operate and sell it to somebody else higher, and don’t think twice if the market looks remotely like it’s about to go sideways.  Although, I’m going to keep the principles I’ve learned to me by other successful investors like Buffett, Sprot and my dad.

So take a look at XRAY, trading at 25x. 

I think there’s got to be a play somewhere on insulation.  Everybody everywhere is trying to improve the efficiency of their homes as energy gets more expensive while the planet gets more polluted.  If I found a company that was operating in that space and trading at all time highs, I’d be all over that…I’ll be looking and will report.