So, you got sucked into the housing boom of the past decade? You quit your job to speculate on real estate, and you made a pretty penny doing it. You couldn't lose.

Or, you put a big chunk of your 401(k) savings into a real estate mutual fund. Who would blame you? The average real estate fund returned 30% over the past three years, nearly double the average S&P 500 stock, according to Morningstar.

That's a great return on your investment. But now, it's becoming pretty clear that the housing market is slowing down. And even if you don't think that real estate is going to crash completely, it's probably not a bad idea to hedge or unload completely your real estate investments.

But, until now, there was no way to really hedge residential real estate. The only ways to even bet against the housing market were restricted to commercial or indirect plays on the housing market.

For instance, you could buy LEAPS put options on builders like Lennar, home improvement retailers like Home Depot, and construction suppliers like Masco. These long-term options would allow you to profit from a fall in these companies' stock prices.

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You could also buy the Short Real Estate ProFund (SRPIX), which trades inversely to commercial real estate shares, using the Dow Jones U.S. Real Estate Index as its benchmark. But it's only a good hedge for investors with a lot of exposure to commercial real estate.

Both are not direct plays on the residential real estate market.

Now, Standard & Poor's will soon introduce the S&P CME Housing Futures and Options, a service that will enable investors to "take a position on the direction of home prices either for the nation as a whole or for 10 major cities to start, including New York, Los Angeles and Chicago," according to CNNMoney.

The S&P is creating a set of housing indices that will lead the way for a futures/options service allowing investors to bet on the housing market. The company sees it as a necessity to help buyers get a better grasp on property values and the housing market overall.

"For the vast majority of Americans, their home is their largest and most valuable asset, and in a period of rising housing prices and increased concerns about a possible housing bubble, reliable information on their biggest asset is extremely important," S&P index committee chairman David Blitzer told MarketWatch.

The new service will be based on information gleaned from an index created by famed Yale economist and author Robert Shiller and his partner Karl Case.

The two "started developing the Case Shiller Home Price Indexes about 20 years ago. The pair claims it is now considered the most accurate measure of the residential real estate markets. The S&P CME Housing Futures and Options will be based on the data accumulated in these indexes, so accuracy is crucial for building trust among potential investors," says CNN.

"Real estate already is volatile and risky - like the stock market," Shiller tells CNN. "And the risk is increasing. The impression that real estate market only goes up is wrong. We need hedging for both sides."

While the service is primarily intended for larger institutional investors, such as home-building companies, its creators contend that there is a great deal of interest from retail consumers. Shiller says there are two ways individuals can make use of this new investment vehicle.

"Investors could buy futures in housing prices and profit if home prices continue to increase (if the investor goes long) or if they fall (if the investor goes short)," the article says. Or "homeowners intending to sell within a year or two can go short in home price futures. If the price of their house drops, that can recapture the loss on the investment."

Another economist even envisions home-equity insurance (just like fire or storm insurance) in the near future - to protect against losses incurred from falling home prices.

Stay tuned for these innovative investment opportunities to become reality.

Editor's note:
Sir John Templeton warns of market, housing crash – Read More Here
Alan Greenspan Warns of Housing Bust, Worse....
Warren Buffett just sold his house . . . find out why - Click Here
Protect yourself from the coming real estate crash . . . read this! Click Here