Prediction markets have become a big deal, presumably because a lot of people like betting. But functionally and economically, prediction markets are also supposed to be about information discovery. If you get enough people researching, analyzing, and thinking about something, eventually the "wisdom of the crowds" should prevail and something resembling the truth should, in theory, emerge. The stereotypical use for a prediction market (also referred to as an event market) is a binary bet. Will this happen? Yes or no.
But now, you can also bet on real estate prices:
Parcl, the real-time housing data and onchain real estate platform, and Polymarket, the world’s largest prediction market, today announced a partnership to bring Parcl’s daily housing price indices to a new suite of real estate prediction markets on Polymarket.
The partnership will introduce housing-focused markets that settle against Parcl’s published price indices, giving traders and analysts an objective, data-driven reference point for forecasting where home prices are headed. Polymarket will list and operate the markets; Parcl will provide independent index data and settlement reference values designed for transparent verification.
Housing is the largest asset class in the world, but it’s still hard to express a clean view on price direction without taking on property-level complexity, leverage, or long timelines. By combining Parcl’s daily indices with Polymarket’s event-market structure, the partnership offers a simpler way to trade housing outcomes, with clear settlement rules and public, auditable resolution data.
Here's a specific example: What will the median home value in Miami be on February 1?
Right now, the market seems to believe it will be greater than $1.1 million. This is fascinating. Among many other things, it gives us a clear and real-time sense of market sentiment. But as Matt Levine wrote in Money Stuff, it also gives homeowners the ability to hedge and diversify their housing market risk. If you live in a cold, high-tax place and you're super envious of everyone moving to Miami, you could, of course, just sell your house and move there too. But if you don't want to do that and you still want to participate in its growth, now you can just bet on its home prices using this derivatives market.
Cover photo by Cody Board on Unsplash
One of the big housing stories of this year was that Austin has built a lot of new apartments and it is now causing rents to fall precipitously — by as much as 22%. The market is working.
But as we also talk about on this blog, the benefits of new "luxury" housing don't just apply to those who can afford it. Since real estate development happens on the margin — in other words, it's based on the feasibility of the next unit of housing supply, not an average for the market — new market-rate housing typically needs to cater to the top end of the market. Otherwise, it wouldn't be economically feasible to build it.
However, study after study also shows that the delivery of any new housing in a city broadly tempers rents, including in a city's oldest housing stock. This is true in virtually all cities:
The Financial Times published an article (paywall) over the weekend about the Nobu Hospitality Group.
It stated that they have some 50 restaurants, 40 hotels, and 20 residential projects (i.e. branded residences) either open or in development around the world. One of the first of these branded residences was here in Toronto. And as of July 2024, which was a major liquidity event for the company, it was valued at US$1.3 billion.
According to group CEO Trevor Horwell, their approach always starts with a restaurant: "It's an upside-down business model where the restaurant is the social engine. If we believe a Nobu restaurant can become a genuine social hub for locals, then the hotel and residences can follow."
I like this business model because as we talked about a year ago on the blog, "everything is branded." Knight Frank out of the UK estimates that the number of branded residences around the world is going to go from 611 this year to around 1,020 by 2030. So it seems destined to become a bigger part of our business.
But the other reason I'm drawn to it is because it's a good business to be in. If you own a brand that has value, you can do licensing deals all around the world — which is what Nobu is doing — and not take on the same equity risk that developers typically take on. It's capital-light.
However, the trade-off risk is that you're dependent on the continued attractiveness of your brand. If Robert De Niro ceases to remain involved and/or Nobu just loses some of its cachet over time, then the business won't do as well. But that's true of any hospitality-type business, or any brand for that matter.
Prediction markets have become a big deal, presumably because a lot of people like betting. But functionally and economically, prediction markets are also supposed to be about information discovery. If you get enough people researching, analyzing, and thinking about something, eventually the "wisdom of the crowds" should prevail and something resembling the truth should, in theory, emerge. The stereotypical use for a prediction market (also referred to as an event market) is a binary bet. Will this happen? Yes or no.
But now, you can also bet on real estate prices:
Parcl, the real-time housing data and onchain real estate platform, and Polymarket, the world’s largest prediction market, today announced a partnership to bring Parcl’s daily housing price indices to a new suite of real estate prediction markets on Polymarket.
The partnership will introduce housing-focused markets that settle against Parcl’s published price indices, giving traders and analysts an objective, data-driven reference point for forecasting where home prices are headed. Polymarket will list and operate the markets; Parcl will provide independent index data and settlement reference values designed for transparent verification.
Housing is the largest asset class in the world, but it’s still hard to express a clean view on price direction without taking on property-level complexity, leverage, or long timelines. By combining Parcl’s daily indices with Polymarket’s event-market structure, the partnership offers a simpler way to trade housing outcomes, with clear settlement rules and public, auditable resolution data.
Here's a specific example: What will the median home value in Miami be on February 1?
Right now, the market seems to believe it will be greater than $1.1 million. This is fascinating. Among many other things, it gives us a clear and real-time sense of market sentiment. But as Matt Levine wrote in Money Stuff, it also gives homeowners the ability to hedge and diversify their housing market risk. If you live in a cold, high-tax place and you're super envious of everyone moving to Miami, you could, of course, just sell your house and move there too. But if you don't want to do that and you still want to participate in its growth, now you can just bet on its home prices using this derivatives market.
Cover photo by Cody Board on Unsplash
One of the big housing stories of this year was that Austin has built a lot of new apartments and it is now causing rents to fall precipitously — by as much as 22%. The market is working.
But as we also talk about on this blog, the benefits of new "luxury" housing don't just apply to those who can afford it. Since real estate development happens on the margin — in other words, it's based on the feasibility of the next unit of housing supply, not an average for the market — new market-rate housing typically needs to cater to the top end of the market. Otherwise, it wouldn't be economically feasible to build it.
However, study after study also shows that the delivery of any new housing in a city broadly tempers rents, including in a city's oldest housing stock. This is true in virtually all cities:
The Financial Times published an article (paywall) over the weekend about the Nobu Hospitality Group.
It stated that they have some 50 restaurants, 40 hotels, and 20 residential projects (i.e. branded residences) either open or in development around the world. One of the first of these branded residences was here in Toronto. And as of July 2024, which was a major liquidity event for the company, it was valued at US$1.3 billion.
According to group CEO Trevor Horwell, their approach always starts with a restaurant: "It's an upside-down business model where the restaurant is the social engine. If we believe a Nobu restaurant can become a genuine social hub for locals, then the hotel and residences can follow."
I like this business model because as we talked about a year ago on the blog, "everything is branded." Knight Frank out of the UK estimates that the number of branded residences around the world is going to go from 611 this year to around 1,020 by 2030. So it seems destined to become a bigger part of our business.
But the other reason I'm drawn to it is because it's a good business to be in. If you own a brand that has value, you can do licensing deals all around the world — which is what Nobu is doing — and not take on the same equity risk that developers typically take on. It's capital-light.
However, the trade-off risk is that you're dependent on the continued attractiveness of your brand. If Robert De Niro ceases to remain involved and/or Nobu just loses some of its cachet over time, then the business won't do as well. But that's true of any hospitality-type business, or any brand for that matter.
The above chart is from this recent Bloomberg article, talking about how "luxury apartments are bringing rents down." But if you look closely, there is one city on this chart that appears to be an outlier: Miami.
Despite adding a respectable number of homes, rents have not fallen as much as you might expect given the figures for the other cities on this list. The intuitive explanation is likely that Miami is in the midst of experiencing an extraordinary wealth transfer.
For the five-year period through to 2022, it was estimated that some 30,000 New Yorkers with combined annual incomes of $9.2 billion moved to Miami-Dade and Palm Beach counties. It's also an important capital safe haven for Latin America.
I vividly remember looking at condo listings in Miami in 2008 and thinking, "Damn, this is cheap!" I even tried to find a job there after grad school, but at that time, it was no place for a new real estate developer. My best bet would have been something in loan workouts.
Who could have predicted such an incredible transformation? It isn't the third most important global city in the US according to the numbers, but it certainly has a lot of momentum right now. In this instance, new supply does not appear to be more than offsetting demand.
Cover photo by Valeriia Neganova on Unsplash
The above chart is from this recent Bloomberg article, talking about how "luxury apartments are bringing rents down." But if you look closely, there is one city on this chart that appears to be an outlier: Miami.
Despite adding a respectable number of homes, rents have not fallen as much as you might expect given the figures for the other cities on this list. The intuitive explanation is likely that Miami is in the midst of experiencing an extraordinary wealth transfer.
For the five-year period through to 2022, it was estimated that some 30,000 New Yorkers with combined annual incomes of $9.2 billion moved to Miami-Dade and Palm Beach counties. It's also an important capital safe haven for Latin America.
I vividly remember looking at condo listings in Miami in 2008 and thinking, "Damn, this is cheap!" I even tried to find a job there after grad school, but at that time, it was no place for a new real estate developer. My best bet would have been something in loan workouts.
Who could have predicted such an incredible transformation? It isn't the third most important global city in the US according to the numbers, but it certainly has a lot of momentum right now. In this instance, new supply does not appear to be more than offsetting demand.
Cover photo by Valeriia Neganova on Unsplash
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