Intrade Bets on Vancouver Housing

The poster Austin over at Realestatetalks has taken the initiative to set up an Intrade bet on the Teranet Vancouver HPI. Here are the two contracts:

https://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=734327&z=1282235580558

This market is based on the monthly Teranet National Bank National Composite House Price Index for Vancouver (from the map on the main page click on the Vancouver pin to see the latest Vancouver index value).

The contract will settle (expire) at 100 ($10.00) if the monthly Index for Vancouver is 121 or less before the end of 2013.

The contract will settle (expire) at 0 ($0.00) if the monthly Index for Vancouver is not 121 or less before the end of 2013.

The index for each month, up to and including December 2013, will be reviewed when published. If the monthly index is 121 or less the contract will be expired at 100. If not the contract will be expired at 0 once the index for December 2013 is published.

And another:

https://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=734326

This market is based on the monthly Teranet National Bank National Composite House Price Index for Vancouver (from the map on the main page click on the Vancouver pin to see the latest Vancouver index value).

The contract will settle (expire) at 100 ($10.00) if the monthly Index for Vancouver is 143 or less before the end of 2010.

The contract will settle (expire) at 0 ($0.00) if the monthly Index for Vancouver is not 143 or less before the end of 2010.

The index for each month, up to and including December 2010, will be reviewed when published. If the monthly index is 143 or less the contract will be expired at 100. If not the contract will be expired at 0 once the index for December 2010 is published.

These bets can behave weird if volumes are low. However if Vancouver residents and outsiders are in a betting mood, this trade could really take off. Place your bets (if you dare!) and good luck. I'll do a bit of analysis of the potential directions and values of the Teranet HPI, in the next 4 months and the next 2 years, in some upcoming posts.

Teranet's report from May 2010 Vancouver index = 155.23.

A value of 143 on December 2010 would equate to an average 1.17% monthly drop for the remainder of the year or a 7.9% drop from May 2010.

A value of 121 on December 2013 would equate to an average 0.58% monthly drop or a 22.1% drop from May 2010.

The June 2010 report will be out in about a week's time.