Any nonrecourse loan is in some sense a hedge against the collateral decreasing in value. "Nonrecourse" means that if you default, they can't take anything other than the collateral. For instance, if you have a $500k house with a $400k nonrecourse mortgage, and the price of the house drops $150k, you're out the first $100k, but you can walk away from the mortgage, let the bank foreclose on the house, and avoid the other $50k of loss.
Mortgages are often technically recourse loans, so in this situation the bank could still sue you for the other $50k, but given how much of a hassle that is, you have significant bargaining power to get them to negotiate a smaller settlement (although such a reduction in debt is treated as taxable income by the IRS).
You should check whether your mortgage is recourse or nonrecourse, and if it's recourse, you could talk to some banks about whether they'd be willing to give you a nonrecoure loan. Be prepared to spend more on interest, though.
There are financial instruments that hedge against a basket of real estate assets, for instance credit default swaps. However, the baskets of real estate assets are generally mortgages rather than the houses themselves and they aren't necessarily geographically specific. The credit default swaps are designed for large institutional investors, not individual homeowners, and the whole housing bubble mess has given them a bit of a bad name.