[arbitrage314]

I'm in full support of some housing/rental market regulation, but such regulation is not without its cons.

Similar to Berlin, in New York, tenants have very strong rights. For instance, if a tenant stops paying rent, the landlord can't evict that tenant for 6 months. This sounds nice--helping someone in need instead of the greedy landlord--but the overall effect is largely negated (as usual, the market seems to always adjust when you mess with it). It's now MUCH harder to get an apartment in New York in the first place. You need a large income, guarantors, or lots of savings, in addition to credit checks, bank staements, tax statements, etc. I'm pretty sure the same people that the law was meant to help are now unable to rent in the first place.

One idea I have is, instead of messing with the free market, create a futures exchange whereby renters and landlords can lock in rent. This market is possible because there are just as many people concerned about rent going up as there are rent going down.

If you want to keep renting, but you don't want to hedge yourself via the futures market or via buying a place, you'll just have to accept the risk that you'll be priced out of your neighborhood someday.

[maljx]

Berlin has rent control, if you stay in the same apartment the rent can only go up a certain % every year. It's also almost impossible to throw out a tenant here.

The main downside to renting is lack of control over stuff like renovations, modifications in the apartment, etc.

[puredemo]

>create a futures exchange whereby renters and landlords can lock in rent.

Can't you just sign a longer lease?

[arbitrage314]

Good point. If you're interested in living in the same place continuously, signing a longer lease is perfect.

I think a futures exchange is a bit more flexible though because: 1. Longer leases are often not available 2. People often want to move apartments after, e.g., having a baby

[oh_sigh]

Considering you and the landlord have opposite goals(you want to minimize rent, she wants to maximize it), it is unlikely you would find a situation where long residential leases are offered.

[mironathetin]

"Considering you and the landlord have opposite goals..."

They don't. Both want long term stability although some owners don't know that this is what they want :o). Landlords who try to maximise the rent face quick change of tenants (who don't stop looking for affordable places) and less care for their property. The price and stress overhead of finding new tenants is not worth the gain, in my experience. Not to forget, that real estate dealers often try to take money from both sides.

[arbitrage314]

Why is that? You might be right, but your argument isn't intuitive to me.

Landlords are afraid of rent going down, and renters are afraid of rent going up, so a long-term contract would be nice because it could simultaneously reduce stress for both of them.

These are the trades that create value--trades that reduce risk for everyone!

[oh_sigh]

Each party has different acceptable levels of risk, and different outlooks on the market. Imagine a hot market. What landlord would sign a long term contract? Imagine if a landlord in silicon valley rented a house out on a 20 year lease 15 years ago. Big mistake.

[arbitrage314]

This happens in other futures markets all of the time. The price/month of a long-term lease ends up being a bit more than the price/month of a short-term lease.

The same thing happens in interest rate markets: if you want to borrow money short-term, the interest rate is pretty low; long-term borrowing is scarier for the lender, though, so the rate charged is much higher (https://en.wikipedia.org/wiki/Yield_curve).