A new online tool developed by Homethinking allows real estate professionals and other users to conjure up their best bet on year-end home prices using market expertise, divining rods, crystal balls or other forecasting aids.

At stake is their online cred: Those users who guess best will receive higher ranking in the online trading community, and real estate professionals can promote their predictive prowess to prospective clients.

The Homethinking Prediction Markets tools are available for the 100 most populated cou

A new online tool developed by Homethinking allows real estate professionals and other users to conjure up their best bet on year-end home prices using market expertise, divining rods, crystal balls or other forecasting aids.

At stake is their online cred: Those users who guess best will receive higher ranking in the online trading community, and real estate professionals can promote their predictive prowess to prospective clients.

The Homethinking Prediction Markets tools are available for the 100 most populated counties in the U.S., and allow users to buy and sell shares using play money to predict year-end home prices on a countywide basis.

A similar online prediction market is the Hollywood Stock Exchange, which allows users to buy and sell shares of actors and movies using play money that they receive when they sign up at the site.

“The stock market is the world’s largest prediction market,” said Niki Scevak, CEO of Homethinking, which also offers an online directory featuring consumer reviews and transaction histories for real estate professionals.

One role of agents is in counseling and advising home sellers and home buyers about the value of a home, Scevak said. The new tools provide a way to “measure and record home-price predictions and then use that as an element of credibility. It is another way to objectively measure the performance of a real estate agent.”

In addition to its use in rating individual agents, Scevak said that the site will enable users to gauge the wisdom of crowds for a given market area by offering up home-price predictions culled from the entire sample of users.

Consumers and appraisers and other professionals who work in and around the real estate industry are also welcome to use the prediction markets tools, he said.

Another real estate Web site, My-Currency.com, also seeks to tap into the collective contributions of users to estimate the value of individual homes and generate price indexes by ZIP code and neighborhood.

Scevak said that Homethinking is basing its tools on home-price data supplied by Trulia, a real estate search and marketing site. Participants can change their estimates over time based on their perception of the direction that home prices are moving.

The challenge with prediction markets, Scevak said, “is making it large enough so we can get a meaningful amount of predictions,” and he said the hope is to build the prediction markets out to more market areas and to get more granular with the predictions to extend down to a neighborhood level.

Users must register at the site in order to participate in the home-price predictions.

Donald Siegel, professor of entrepreneurship at University of California, Riverside, who served as a guest editor this year for a conference on gambling and prediction markets, said prediction markets are “the way to go” because “people want to have a better sense of what’s going to happen in the future.” Prediction markets work best, he said, when there is heavy trading and don’t work as well in a thinly traded market.

There are some existing forums for trading in home-price futures using real money, such as the Chicago Mercantile Exchange. That group has offered housing futures and options since 2006 for 10 cities, and is expected to offer housing futures and options contracts next month based on the Standard and Poors/Case-Shiller U.S. National Home Price and Composite Indices extending out to five years.

Kevin Boer, a Realtor with 3 Oceans Real Estate in Palo Alto, Calif., said the concept of prediction markets for home prices may work best in the context of a game, as it may otherwise be “a little too esoteric” for most real estate agents and brokers to embrace at this point. “I’m skeptical that (prediction markets) are going to take off in the short run,” he said.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Refer, reward, repeat. Share a 90-day free trial and get $$$.Refer & Earn×