[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).