Analysts are saying housing derivatives could take center stage in 2007. If they’re right, residential property owners in New York will be taking advantage of the new futures, swaps, and options contracts to hedge their risk, and they will be able to better gauge the future of the city’s housing market.

Based on housing price averages, derivatives contracts are used to secure value in the residential housing market over time. They have been offered in limited forms since May, and similar products should be more widely accessible over the coming months as several large firms, including Goldman Sachs and Morgan Stanley, are set to release new types of contracts.

The indices on which the derivatives contracts are based hold importance for all homeowners in New York and other major metropolitan areas. They offer a rare look at the future of a city’s real estate market.

“If I had to go out and buy an apartment I would love to look at the professionally traded futures market for New York,” a housing derivatives broker for Tradition Financial Services, Fritz Siebel, said. “If you look at the New York housing futures market, and four years out it’s looking down, you’re going to say, ‘I want buy, but I’m going to lose value on it because it says the market’s going down.'”

There is debate about the accuracy of various housing price indices. Overall, though, experts say they could help homeowners decide when to sell and when to buy — and how best to handle market slowdowns.

“What happens now in a slow market is that people are very reluctant to cut prices and sales drop sharply,” a Yale University economics professor Robert Shiller, said. “Then you have people sitting on their houses,” he said in an interview. Mr. Shiller created the Case-Shiller Home Price Index, which monitors the sale of the same properties at different times to create a picture of the housing market.

Mr. Shiller explained that homeowners who knew the direction their market was expected to take over a coming five-year period could make decisions based less heavily on present anxieties and more on market realities

Mr. Siebel said he believes that if housing price derivatives gain momentum, with a high volume of contracts and a broader range of investors, regular homeowners and prospective buyers could start to benefit from the indices’ popularity, spurred by press coverage of the growing market. “It has to be on CNBC; it’s got to be talked about on the 6 o’clock news,” Mr. Siebel said.

The president of the New Yorkbased consulting group Miller Samuel, Jonathan Miller, said the current market faces significant problems. He said the low volume of transactions in housing skews measurements of the market. “Transactions in real estate investing are large and inefficient,” Mr. Miller said. “You’re not talking about hundreds of transactions.”

He added that too few investors had displayed interest in the derivatives currently available for the housing market. “There’s very low investor interest,” he said in a telephone interview. “You’re not seeing heavy volume of trading, so it’s not an official market.”

Housing derivatives have the potential to flourish; the Federal Reserve estimates the total market value of American housing is $22 trillion. Up to now, only the Chicago Mercantile Exchange has offered futures contracts, based on the Case-Shiller Index, for housing prices. The CME reports that its housing futures are best suited for builders, banks, mortgage holders, and hedge funds — sizeable entities looking to reduce their risk or play the market, not individual investors or homeowners.

One of the criticisms of the CME’s contract positions is that their $40,000 to $75,000 range makes them inaccessible to smaller investors, a limitation that will soon be removed as new, over-thecounter housing derivatives products become available from Goldman Sachs. The New York-based firm Radar Logic is also offering over-the-counter contracts using its own indices, based on a different methodology.

Both the National Association of Realtors and the Office of Federal Housing Oversight compile market indices, but they have been criticized as inaccurate and no derivatives market has coalesced around them.

A spokesman for Morgan Stanley, Mark Lake, said his firm was still waiting to see how investors would take to the new housing derivatives products in what he called a “fledgling market.” Morgan Stanley is one of several firms invited by Goldman Sachs to sell over-the-counter housing derivatives contracts, but neither firm has committed to a date on which the contracts will be available.

Mr. Miller said that investors’ willingness to accept the new market and its corresponding indices was an important factor in the market’s growth. But he noted that other markets had similarly uncertain beginnings. “You introduce mortgage-backed securities 20 years ago it was unheard of, it was a new thing, it wasn’t going to work and then it stuck around and now it’s status quo.”