San Francisco broker-investor Carl Wescott thinks he has a good feel for the real estate market. So when he learned he could speculate on the market at HedgeStreet.com, he took the plunge.

Wescott bet $4,000 that the median price of a single-family home in the San Francisco area wouldn’t rise above $729,000 in the third quarter of this year. When the National Association of Realtors numbers came out in November, he walked away $5,000 richer.

“I had the theory that the single-family residential market in my local area would peak and this was a good way of playing that theory,” Wescott said. “I was up 113 percent in only a month’s trading.”

Realtor Wescott, who runs a brokerage called PeopleBridge in San Francisco, is only one of a number of people who are speculating on real estate prices in new ways.

We’ve all heard the expression, “Don’t bet the farm,” but betting on the housing market is becoming an increasingly popular — or at least accessible — option.

A number of venues, from online entity Hedgestreet.com to the Chicago Mercantile Exchange, have recently decided to offer the opportunity to consumers. The trend is an example of how the real estate market continues to occupy the forefront of consumers’ minds.

Simon Noble, CEO of UK-based PinnacleSports.com, said “thousands” of people jumped at the opportunity when his betting site added house-price betting to its offerings in September.

Noble came up with the idea because “everybody’s talking about real estate,” he said. “We’re always coming up with new ways to bet; we’re offering betting on the success of the Star Wars movies, who’s going to win the Oscars. With the housing boom on the minds of buyers and sellers, we thought it would be a good idea.”

The idea caught on quickly with bettors, according to Noble. Though the site isn’t currently offering bets on real estate prices, because “the cost of housing has fallen off the front pages and national newscasts,” a spokesman said, PinnacleSports.com expects to offer wagering on the housing markets when the topic again gains more media and consumer attention.

In the September real estate market betting, customers bet as to whether the National Association of Realtor’s median price for a single-family residence would go higher or lower than a given amount in a given area in the third quarter of 2005. Nineteen metropolitan markets were included.

East Coast bettors were far more successful than those on the West Coast, the CEO said. Noble had no comment as to whether this was an indication that people on the West Coast are less in touch with reality.

PinnacleSports isn’t the only established site to add real estate to its offerings. HedgeStreet.com announced in May that its market participants may now hedge or speculate on the direction of home values in major U.S. real estate markets.

The company is a U.S. government-designated online financial market that lets traders directly buy and sell innovative financial instruments based on economic events.

The procedure for real estate hedging on the site is simple, according to Russell Andersson, co-founder of HedgeStreet Exchange.

“You deposit $100 using your credit card,” he said. “Then you choose the market.

“The price currently given for San Francisco is $743,000,” Andersson said. “Now, do you think the median price of a house in the San Francisco area as reported by NAR will be above that number on May 13? If you think it is, click on that choice, pay the required amount, and if you are correct you get $10. If you think it will be below, choose that option and if you win you get $10.”

So far, Andersson said, a number of people have participated, though he wouldn’t say how many. The co-founder pointed to similar developments in the financial world as an example of the viability of the concept.

“We’re pleased that Chicago Mercantile is doing this. We see it as a validation of our concept,” Andersson said. “But we’re much more accessible. You can fund your account with $100. Almost anyone can do it. You can speculate for profit instead of buying a house.”

Andersson was referring to the fact that the Chicago Mercantile Exchange, the largest futures exchange in the United States and founded in 1898, recently announced that it will begin offering trading in U.S. home prices in April 2006.

The exchange, a financial marketplace dealing in the value of everything from interest rates to foreign currencies, will offer trading in housing-price futures based on the median home price in each of 10 U.S. cities.

“The idea of betting on the value of everyday items has been around for some time,” said Felix Carabello, associate director of alternative investments for the exchange. “The housing boom is what caused it to resonate with home buyers and others.”

The exchange’s derivatives aren’t really intended for everyday homeowners; the cost of investment is too high, and it’s necessary to sign up with a broker to participate.

A financial analyst sounded a note of caution about the trend.

“If you’re interested in online gambling, you might give this a whirl,” said Keith Gumbinger of New Jersey-based financial publisher HSH Associates. “You are speculating to a good degree.” Gumbinger said the average home buyer probably “wouldn’t want to throw his IRA at it,” since losses can be costly.

“It might be interesting to bet that the marketplace is going to decline or improve over a given amount of time,” Gumbinger said. “I’m just not sure it’s ready for Joe and Jane Sixpack.”

But those relatively sophisticated in the field of real estate, like Carl Wescott, might have a better-than-average shot, as Wescott’s success seems to suggest.

Wescott himself disagreed with Gumbinger.

“Across the country everybody has been talking about real estate because so many of us have equity tied up in our homes. Everyone has these cocktail party conversations and this is a way to keep score of your predictions,” Wescott said. “It’s an interesting democratization of trading systems.”

To Wescott, HedgeStreet and its ilk offer “a movement where you take Wall Street to Main Street and the average person has a chance to bet.”

***

Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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