With an aggregate capital value of $16.6 trillion at the end of 2009, real property owned by United States households comprises the largest real estate marketplace – and one of the largest asset classes in the world. Its economic value is larger than that of U.S.-listed equity securities, and almost three times the estimated capital value of U.S. commercial real estate assets.

Despite its huge scale and widely-held exposure, the U.S. single-family housing market remains highly inefficient and incomplete due to a variety of factors, including very high costs of transacting in and owning brick & mortar assets. Those exposed to home price risk – individuals and institutions – have no direct or efficient means to hedge.

Historically, U.S. single-family housing returns have had low or negative correlations vs. other, more actively priced and traded asset classes. The table and hook chart below provide indications of the potential portfolio diversification benefits and risk-adjusted return enhancement that more liquid forms of U.S. housing investment can deliver.