Maybe there is a business model in lending out houses so people can short the housing market? Again, not sure how that would work since houses aren't fungible in the same way that securities are.

I own a stock. You think the price will go down. To make this bet, you borrow the stock from me. You then immediately sell it at the current price. Later, if the stock is down, you can buy it back at the new (lower) price, give it back to be, and pocket the difference. If, unfortunately for you, the stock's price has actually gone up, you have to either continue to pay for the carry on the position (essentially paying me rent for my stock), or else take the hit by buying the stock at a higher price, giving it back to me, and eating the difference.

The analogy doesn't quite work with houses, because they're not fungible. I don't care which specific share of stock I get back, because they're all the same. I DO care which specific house I get back if I rent it out to you. Furthermore, I would be REALLY mad if I rented you a house and you then sold it to someone else, since that is just flatly illegal.

Still, I wonder if a lot of the structural problem with housing markets is that there is insufficient short pressure. In other words, there is an obvious way to make the bet that prices will go up (buy one), but no obvious way of making the opposite bet, unless you already have a house, and decide to sell it and begin renting, which hardly anybody does.

How can we let ordinary people short housing in their area?

Assuming you could have made the same down-payment and gotten the same deal on a mortgage as the landlord.

The rent being paid also includes other expenses that the landlord has, like marketing of the property, that the owners don't have.

With the implication that the ONLY costs of a house are PITI, insurance, and taxes. However, if you add in reasonable, even cheap values for yardwork/lawncare, roof depreciation and replacement, HVAC depreciation and replacement, and general refurbishment remodeling and replacement of interior surfaces, OP is losing a large amount of money per month. The gamble is, will OPs house appreciate in value more than OP is losing per month, or will OPs other investments made with 380 be able to keep up? OP can always walk away and mail the keys to the lender, of course, if it comes to that, so maybe extracting $400/month with the intent to foreclose when eventually necessary is a legit plan.

A lot of people treat normal household expenses as an unfair accident, as if replacing the old fashioned tank water heater every decade is some totally unpredictable meteor strike that should never be accounted for in the cost of ownership.

In general most models of home ownership hold water if the only expenses accounted for are annual or shorter term, but I spend roughly the same amount, maybe more, on average, of expenses of longer than annual duration. $15K every 15 years for a roof is not unpredictable meteor strike but is actually about $85/month. Built in dishwashers are designed to break down requiring replacement every three years, which isn't a disaster but is thirty bucks per month on average. A new 5K asphalt driveway every twenty years is not an unpredictable accident but is about $20/month. True, none of these are small bleeds are over $100/month or so, but the average house has well over a dozen of them. Figure about $1K to $2K per month of longer than annual term expenses.

Then there are remodeling costs. Its very difficult to sell a house with a 1970s kitchen. Most house kitchens seem to get remodeled every two decades for perhaps $25K each time. You can pretend that was an unpredictable uninsured natural disaster, but more realistically you need to save $105/month for the periodic kitchen remodel. Of course a stylish avocado color bathroom or shag carpet era living room will require similar amounts of money... The expense of "fashion" is around $500 per month for a typical house. You can do the elderly WWII or boomer thing and refuse to remodel your house, but the cost is coming out of the sales price eventually. Wood paneled shag carpet rec room in the basement ... people are going to make fun of stainless steel appliances and especially granite countertops the same way in 2030 or so, if not sooner.

There do exist weird pseudo-accidental problems. Planting a fast growing inappropriate tree in a dangerous location is the same thing as committing to spending $1K for a bonded insured tree service to chop it down and grind the stump. You can try to hand wave away that nobody could have known that cute little pine sprig on the property line could be a kilobuck liability a decade later, but uh, yeah, many people could tell that a big dead tree overhanging the neighbors house is going to be an expensive and entirely predictable problem, eventually.