In a fit of apparently propitious timing, MacroMarkets, LLC, the developer and seller of structured financial products co-founded by Dr. Robert Shiller, on Tuesday will introduce its new MacroShares Major Metro Housing Shares to trading on the New York Stock Exchange.

Why propitious? Well, in California at least, it looks like prices are starting to firm up and even rise. The early second-quarter view from Lennar and KB Home earnings ;last week also seems to indicate better news, or at least market movement, ahead. 

The new housing shares will trade under the symbols UMM, for housing market up, and DMM, for housing market down. The shares will track the S&P/Case Shiller Composite 10 home price index, a value-weighted average of the 10 original Case-Shiller metro area indices, which include Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington.

The shares were originally slated to begin trading in May, but an initial public offering by MacroMarkets was undersubscribed and withdrawn. MacroMarkets then turned to private equity, which was recently okayed by the Securities and Exchange Commission.

Now, don't be conjuring up visions of Professor Shiller, Realtor in tow, shopping around for real estate in which to invest the funds behind the shares. The funds, which are set up as a separate trusts, one for up and one for down, will own no real estate, just 90-day Treasuries, overnight repurchase agreements secured by Treasury securities, and cash. Very basically, what will happen is the funds will move assets between one another based on the Case-Shiller index. Both the up and down will be capped at a maximum profit or loss of 85% from the initial price of the shares, which are set for redemption on Nov. 25, 2014. The original indicative price range for the failed public offering was between $13.20 and $16.50 for UMM and between $30.80 and $38.50 For DMM.

Once the shares start trading, the bid and ask prices will swing based on the current Case-Shiller Composite-10 index. As money moves between the funds, the gains or returns on the shares will swing as well.

That index for March stood at 151.41 (home prices were 151.41% of what they were in the benchmark month of January, 2000. If, for some reason, the house price index soars or crashes beyond the 85% cap, a payout would be triggered and a new set of shares based on the higher or lower index value would be issued. Oh, and by the way, the shares are leveraged 3 times, meaning that any movement in the index is magnified in the shares by a factor of 3.

Professor Schiller has posited that the shares may be a good way for home builders to hedge their actual real estate positions. Likewise, a consumer who has heavy real estate exposure might want to play the DMM to help offset potential declines in the value of actual real estate assets. The UMM might prove a good shield against the rabid inflation many expect in coming years as the politicos keep buying up votes with massive social welfare spending. Wild-eyed speculators may wish to engage in, well, wild-eyed speculation.

It happens also that the Case-Shiller Index for April will be out tomorrow before market open, and it is almost certainly not going to report anything resembling a price increase. It will be interesting to watch how the trading goes.