Polymarket, a cryptocurrency-powered prediction market platform, has partnered with Parkle, a data company that tracks daily home values, to let Americans bet on whether home prices in major U.S. cities will go up or down.
The two companies will work together to allow users to put money into what they think will happen to median prices in cities like Miami and Los Angeles, to get started.
These markets will close on February 1st and winners will be determined using Parcl’s daily price index. However, Polymarket says a new housing prediction market is held every month, so people can continue to trade based on the most up-to-date data.
At this time, most Americans still do not have access to the polymarket. Access is limited to waiting list. But competitors like Kalsi and Robinhood are already available to the public.
Users bet on real-time house price movements
The housing market is always full of outdated data. Most price indicators use past sales and are published several months after the fact. Real estate agents and analysts say this is the most reliable way to determine demand in a city. But the problem is that these reports move slower than the market itself.
Polymarket wants to change this by providing people with real-time information. And prediction markets have a big advantage, proponents say, because people are literally putting their own cash on the line. People pay more attention when money is at stake. These types of bets are not just about opinions. They are about incentives.
And apparently those incentives are working. Polymarket traders were closer to predicting Donald Trump’s 2024 victory than most political pollsters. The idea is simple. When many people put their skin in the game, the average of their bets often exceeds the guesses and research of experts.
This comes as the U.S. housing market reaches a strange new juncture. There are now more homeowners with mortgage interest rates above 6% than below 3%. Loans below 3% were common during the pandemic. It has become a rarity now. The average 30-year mortgage rate has remained above 6% for more than three years, according to Federal Reserve statistics.
Those who locked in these low interest rates are staying put. They don’t want to exchange a cheap loan for a more expensive loan. This has resulted in a tight housing supply. The fewer properties there are, the higher the price, a situation known as the mortgage lock-in effect.
Market remains frozen as interest rates deter sellers
Even if interest rates are high, people will still sell if they have no other choice. Life happens. Jobs change, families grow, divorces happen, people retire. So some homes are still on the market. But most new 30-year mortgages are now in the 6% range, and the pool of ultra-low-interest owners continues to shrink.
Darryl Fairweather, Redfin’s chief economist, said moving mortgage rates from below 3% to above 6% won’t be a quick fix. “It’s becoming less of an issue as time goes on, but it’s going to be a slow fix,” he said.
To her, anyone with a rate below 4% is essentially still stuck. This includes more than half of current mortgage holders. Even interest rates below 5% are too good for most people to walk away from. “It’s probably going to be a major component of the housing market for another four or five years,” Darryl said.
A Bankrate survey conducted in July found that 54% of Americans wouldn’t sell their home no matter what the mortgage rate was. This was an increase from 42% the previous year. About 32% said they would only sell if interest rates fell below 6%, and 23% said they would have to wait until interest rates fell below 5%. This 1% difference may not sound like much, but it can add up to tens of thousands of dollars over a 30-year loan.
Not everyone is sold on the idea of betting on housing data. Bankrate senior analyst Stephen Cates said there is already enough tracking in this area. “This partnership will allow participants to speculate about existing trends,” he said.
