New exchange forecasts home prices New York market may drop in second quarter, data shows By Alistair Barr, MarketWatch Last Update: 6:57 PM ET June 8, 2005 ---------------------------------------------------------------------- SAN FRANCISCO (MarketWatch) -- Homeowners and prospective buyers worried about surging prices have a new place to go to check the pulse of real estate markets. HedgeStreet, an online derivatives exchange that opened last year, lets ordinary folk bet on the outcome of economic events and the price of things like currencies, gasoline and interest rates. Hedging and speculation like this used to be the exclusive domain of companies, investment banks and hedge funds. In May, the San Mateo, Calif.-based company introduced new derivative contracts based on the future median price of single-family homes in Chicago, Los Angeles, Miami, New York, San Diego and San Francisco, as published by the National Association of Realtors. Now that customers have begun trading, HedgeStreet has started compiling forecasts based on the price of the derivative contracts. The first forecasts - based on contracts linked to house prices at the end of the second quarter -- are in. "Prices on HedgeStreet become pretty interesting predictors of market consensus," Russell Andersson, co-founder of the company, said. "Participants are expressing their views on the future of housing markets and that's valuable information." HedgeStreet traders are betting that the median price of a single family home in New York will drop 1% to $431,010 during the second quarter, versus the first three months of 2005. Real estate markets in Los Angeles and San Diego are expected to continue their recent hot streaks, rising 6.2% and 4.1% respectively in the second quarter, HedgeStreet said. House prices in Miami, San Francisco and Chicago are also expected to rise, but not at such a brisk pace. Miami homes are forecast to appreciate by 3% to a median price of $325,175 in the second quarter, HedgeStreet said. The San Francisco market may climb 1.2%, while Chicago edges up 0.7%, the company added. The forecasts are based on bids in HedgeStreet's real estate markets on June 6. HedgeStreet said it plans to publish more forecasts in future.