Online prediction markets - pastime now, credible later?

Kevin Boer, an innovative Palo Alto based Realtor (his blog has original insights - read it), reviews his prediction market on the median price of sold homes on the San Francisco Peninsula. Inklingmarkets, the website running personal prediction markets, still doesn't have critical mass and Kevin admits the thin trade volume and the lack of analysis by traders is the definition of an inefficient market. I took his advice and bought some "Mountain View" with my funny money inkling bucks.

The Chicago Mercantile Exchange is already trading residential housing futures and options and will be rolling out commercial real estate counterparts this fall. These products are generally traded by institutions for hedging purposes. The intriguing proposition for the future is whether consumer-focused online predictive markets like Inklingmarkets and their consumer-driven ilk will begin to influence institutional CME products. After all, consumer traders on the ground at local markets see far more than their counterparts on a Park Avenue trading desk... and working together in aggregate could potentially exploit perceived market inefficiencies.

Kevin also mentions that buyers seem to be returning post-Labor Day in Palo Alto. A hunch, but in aggregate, an online predictive real estate market that spanned across regions might predict an upturn more quickly than waiting for end of month NAR stats.

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  • 9/19/2006 10:42 PM Kevin wrote:
    Thanks for checking out my Inkling Market! My market control panel says that as of today (9/19/06) you've made $33.75 profit trading in this market.

    Another hint for you and your readers:

    There's also money to be made in shorting a stock. If you look carefully, you'll find a wildly overvalued city. Sell, sell, sell!
    Reply to this

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