Why Are Japanese Homes Disposable? A New Freakonomics Radio Podcast

(Photo: Jacob Ehnmark)

(Photo: Jacob Ehnmark)

In most countries, houses get more valuable over time. In Japan, a new buyer will often bulldoze the home. Why? That’s the question we try to answer in our latest Freakonomics Radio podcast, “Why Are Japanese Homes Disposable?” (You can subscribe at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

Jiro Yoshida, a professor at Penn State University who specializes in real-estate economics, tells us that, per capita, there are nearly four times as many architects in Japan as in the U.S. (here’s data from the International Union of Architects), and more than twice as many construction workers. There is also a huge demand for new homes. When you put all those numbers together, it sounds like a pretty typical housing boom — and yet Japan has a shrinking population and a long-stagnant economy.

It turns out that half of all homes in Japan are demolished within 38 years — compared to 100 years in the U.S.  There is virtually no market for pre-owned homes in Japan, and 60 percent of all homes were built after 1980. In Yoshida’s estimation, while land continues to hold value, physical homes become worthless within 30 years. Other studies have shown this to happen in as little as 15 years.

Does this make  sense? Not according to Alastair Townsend, a British-American architect living in Japan, who is perplexed — and awestruck — by the housing scenario there:

TOWNSEND: The houses that are built today exceed the quality of just about any other country in the world, at least for timber buildings. So there’s really no reason that they should drop in value and be demolished.

In the podcast, we look into several factors that conspire to produce this strange scenario. They include: economics, culture, World War II, and seismic activity.

Richard Koo, chief economist at the Nomura Research Institute, has argued in a paper called “Obstacles to Affluence: Thoughts on Japanese Housing” that whatever the rationale behind the disposable-home situation, the outcome isn’t desirable:

KOO: And so you tear down the building, you build another one, then you tear down the building, and you keep on building another one, you’re not building wealth on top of wealth…And it’s a very poor investment. Compared to Americans or Europeans, or even other Asian countries where people are building wealth on top of wealth because your house is [a] capital good. And if you do a certain amount of maintenance you can expect to sell the house at a  higher price. But in the Japanese case once you expect to sell it you expect to sell at a lower price 10 or 15 years later. And that’s no way to build an affluent society.

All that said, economists continue to debate whether a house is such a great investment in the U.S. One more burst bubble and maybe we’ll all start thinking about the Japanese model.

(Special thanks to Gavin Hayes and Paul Earle at the U.S. Geological Survey for helping us sort through earthquake data.)

Audio Transcript

[MUSIC: Collective Acoustics, “Don’t Text Me Bro” (from BC ? AD)]


Stephen J. DUBNER: So let’s say you’re an architect. And what you really like to design is single-family houses – houses with flair, with distinctive, maybe even avant-garde features, and you want to design houses that will actually get built. So if that’s who you are, then for you, Utopia might be Japan.


Jiro YOSHIDA: …so they make very, very weird looking or avant-garde looking houses.


Richard KOO: Well, one of…it’s hard to describe, but…


Alastair TOWNSEND: …quite avant-garde, radical design…


YOSHIDA: …strange-looking, weird-looking…


TOWNSEND: Living in the home is like climbing around a jungle gym or a matrix.


KOO: One of them was about four or five stories, but one wall was cut in such a way that the floor space at the fifth level was bigger than the fourth, and the third, and the second. And it looked very unstable. Of course, it’s highly eye-catching.


TOWNSEND: They don’t have handrails on stairways and balconies.


YOSHIDA: A three-story building can be built on, maybe 500 square feet.


TOWNSEND: They have walls that can open entirely exposing the house to the outside.


KOO: The design can be very, very sharp, or really, really unique.


TOWNSEND: Even homes that have no windows at all.


KOO: …and it was covered in this textured material that at least to me was a complete eyesore, but maybe for some modern artist it was something to be proud of.


DUBNER: Okay, so if you are an architect, not only can you go wild with the design of Japanese houses. But even more important, there’s a lot of work.


YOSHIDA: There’s a huge demand for new homes.


DUBNER: Jiro Yoshida specializes in real-estate economics at Penn State University. He used to work on the same issues for the Japanese government.


YOSHIDA: So, on a per capita basis, the number of architects in Japan is 3.8 times greater than in the United States.


DUBNER: There are in fact more registered architects per capita in Japan than any other country. Not so surprisingly, there are a lot of construction jobs too.


YOSHIDA: And, so in Japan, the construction employment as a percentage of the total population is 2.1 times greater than in the United States.


DUBNER: So let’s add this up: a lot of construction jobs, a lot of architects, and a huge demand for creatively designed homes. So that sounds like your pretty typical housing boom, yeah?


TOWNSEND: I think you have to dig deeper than that.


DUBNER: Alastair Townsend is an architect in Japan. And as he’ll tell us today, the story of home-building there has an unusual wrinkle.


TOWNSEND: It’s just such a profound and huge thing. And it doesn’t seem to occur this way in any other country in the world. And so I’m genuinely, even though I know a lot about the topic, I’m still sort of baffled.




ANNOUNCER: From WNYC: This is FREAKONOMICS RADIO, the podcast that explores the hidden side of everything. Here’s your host, Stephen Dubner.


[MUSIC: Ruby Velle & The Soulphonics, “Looking For A Better Thing” (from It’s About Time)]


DUBNER: On today’s show, we’re talking about the huge demand for new homes in Japan. Now, when you hear that phrase – “a huge demand for new homes” – you probably think it’s because of either a booming economy or a growing population, maybe both. But in the case of Japan, there is neither. The economy has been famously stagnant for more than two decades, and the Japanese population has been shrinking, dramatically shrinking, and continues to do so: the government says the Japanese population will decrease by an astonishing 30 percent by the year 2060. So what does this mean for housing? Japan has an abnormally high vacancy rate, estimated to be in the mid-to-high teens. So you’d think, with so many vacant homes, there wouldn’t be a lot of new home-building. You’d think that if someone was looking to buy a house, they’d simply buy one, maybe freshen it up, and move in. But that’s not what happens. Here’s Jiro Yoshida again.


YOSHIDA: According to an engineering study, approximately half of houses are demolished before 38 years of building age in Japan…


DUBNER: Okay, did you hear that? Half of all homes are demolished before they’re 38 years old.


YOSHIDA: So basically that is the half-life of housing stock in Japan. So half-life of housing stock in Japan is 38 years. In contrast, the half-life in the United States is approximately 100 years. So that’s a huge difference.


DUBNER: So more than 60 percent of all Japanese homes were built after 1980. Now why would that be? Again, you might think it’s because of a baby boom or a growing economy, but Japan doesn’t have either of those. The reason that so many not-very-old homes in Japan are knocked down seems to be this: they’ve lost their value.


YOSHIDA: And in my estimation, the structure fully depreciates after 30 years for detached houses, and after 40 years for condominiums. So it’s really, really fast.


[MUSIC: Pearl Django, “Spiral Waltz” (from System D)]


DUBNER: That’s right: a home in Japan loses its entire value after just 30 years – or, according to other studies, in as little as 15 years. Now that’s the house itself, not the land, although land values have certainly fallen since their peak. A little quick history here. During the last half of the 1980s, land prices in Japan more than doubled. Richard Koo is chief economist at Nomura Research Institute in Tokyo.


KOO: Land prices were so high that just the Imperial Palace garden in the middle of Tokyo during the bubble was worth the entire state of California back in 1989.


DUBNER: But that bubble burst, and property values have fallen. Jiro Yoshida again.


YOSHIDA: Since then housing prices in Japan have been continually decreasing, except for a few years of small appreciation in 2007 and so on. Compared to 1991 price levels, current housing price levels, will be probably 40 percent of the peak.


DUBNER: Okay, so that is a big fall in property values, 40 percent off the peak prices, but it’s not like they fell to zero. That is, however, essentially what does happen to the value of the physical house in Japan. There is only a tiny resale market in Japan for used houses; in most cases, when a property is sold, the house is demolished and a new one built. This is in direct contrast to most places – the U.S. in particular – where not only do homes keep their value, but older homes, with their Colonial charm or brownstone character, they are particularly cherished:


TOWNSEND: The Japanese are willing to look beyond all of that and just demolish a house, even though it could provide shelter and it could be renovated for a lot less than they would spend building a new house.


DUBNER: Alastair Townsend was born in England, grew up in Iowa, and returned to England to become an architect.


TOWNSEND: Well, I met my wife, who’s Japanese, as a student in London. And we worked for a number of years for architects. But since I decided to study architecture I’ve always been fascinated by the radical homes that I saw in Japanese architectural magazines.


DUBNER: Whey they finished their studies in England, they saw that their opportunities would be limited.


TOWNSEND: We decided to leave London because it’s actually very hard to build new housing there as a young architect. Most of the commissions are renovations and refurbishments of existing old houses because the planning system makes it very hard to build new homes, and people value historic homes more than they do new ones. And we moved to Japan in order to get more experience and hopefully build more.


DUBNER: In Japan, Townsend found a huge appetite for new homes.


TOWNSEND: You see advertisements everywhere on the train and on billboards for new housing, commercials on television, TV programs.


DUBNER: In Townsend’s opinion at least, the fact that Japanese homes don’t hold their value changes what people are looking for when they hire an architect.


TOWNSEND: The economic incentives to build a house that will one day be resold don’t exist in Japan because of housing depreciation. And this means that a client is free to build a house according to their own personal preferences and their own idiosyncrasies.


[MUSIC: Heavy G and the Boogaloo Communicators, “Zumbamala”]


DUBNER: Townsend also thinks that, with so many architects in Japan, they are all fighting to stand out in a crowd. Plus which, local governments typically don’t regulate neighborhood aesthetics like they do in many countries. So that may help explain all the unusual and avant-garde houses in Japan. But we still haven’t answered the more bizarre question: why are Japanese homes essentially disposable?


TOWNSEND: The houses that are built today exceed the quality of just about any other country in the world, at least for timber buildings. And so there’s really no reason that they should drop in value and be demolished.


DUBNER: So why are most houses knocked down when someone buys them? Coming up on Freakonomics Radio, we try to answer that question. Does it have to do with culture or economics or maybe manufactured fear?


TOWNSEND: I really feel that the risk of earthquakes to single family homes is overstated, and it’s a way that house builders market their houses.




ANNOUNCER: From WNYC: This is FREAKONOMICS RADIO. Here’s your host, Stephen Dubner.


[MUSIC: Soulglue, “Broken” (from Arboretum)]


DUBNER: So we’ve been talking about the housing market in Japan. Prices have fallen a lot since their peak, but the land itself continues to be valuable. The houses, on the other hand, lose just about their entire value after two or three decades, because most Japanese home buyers do not want used homes. Why? Here’s Jiro Yoshida again, from Penn State.


YOSHIDA: On this issue, people have many, many casual observations, or causal explanations. For example, many people say that Japanese consumers are just different, Japanese consumers just like new things, okay? For example, the most sacred Shinto shrine is called Ise Jingu…


TOWNSEND: And this shrine is a massive timber structure. But every 20 years it’s torn down and a new identical shrine is built on a plot next to it.


DUBNER: And that is Alastair Townsend, the British-American architect living in Japan.


TOWNSEND And this is something very ingrained within the Japanese psyche, which values newness as something that is spiritually clean and pure.


DUBNER: So maybe the hunger for new homes is a cultural appetite, at least to some degree.


YOSHIDA: For example, if we take a look at the second-hand, or used car market, okay? Even used cars are traded really cheaply in Japan compared to other countries, so there’s something to it, but it’s not the whole thing.


[MUSIC: Crytzer’s Blue Rhythm Band, “Someday Sweetheart” (from Chasin’ the Blues)]


DUBNER: Okay, so what else might explain Japan’s disposable-housing attitude? Let’s go back to World War II. The most famous U.S. attacks on Japan were the atomic bombs dropped on Hiroshima and Nagasaki. Both cities were devastated:


UNIVERSAL NEWSREEL FROM 1945:  This is the gallant crew that rolled the big superfort, which carried the first atomic bomb to Japan. Piloted by Col. Paul Tibbets Jr. of Miami,  carrying Navy Captain William Parsons of Chicago, who helped design the bomb, as observer, and Major Thomas Ferebee of Mocksville, North Carolina, who pulled the plug on Hiroshima. The B-29 dropped its load of atomic death, which exploded with a force equal to 20,000 tons of TNT. A few days later, the second atomic terror was loosed on Nagasaki.


DUBNER: But the U.S. dropped a lot of non-atomic bombs in Japan, in a lot of other cities. Five months before the atomic bombs, more than 300 American B-29sstarted dropping more than 2,000 tons of incendiary bombs on Tokyo. Most of the city was burned to the ground. 100,000 people were killed and 1 million people were left homeless.


KOO: And after World War II, when everything was flattened by American bombing, they had to rebuild everything very, very quickly.


DUBNER: That’s Richard Koo, from the Nomura Research Institute.


KOO: And at that time they didn’t pay much attention to the quality of houses that they were building.


TOWNSEND: It was certainly the case that after World War II, many of the houses that were built during the boom were shoddily constructed.


DUBNER: Alastair Townsend again.


TOWNSEND: They lack insulation, and are generally very cold, they have heavy tile roofs, which make them a liability in earthquakes. So it’s understandable that those houses are being replaced.


[MUSIC: Izm, “Dundill”]


DUBNER: So you can see why the first round of homes built in Japan after the war were  torn down after not too long, especially as the country started to get richer. But there’s another factor that led the Japanese to think of their homes as non-permanent, and that is earthquakes. Twenty percent of the world’s earthquakes of magnitude 6 or greater happen in Japan:


KOO: And because of that history, Japanese have come to view the houses, building structures in general, as kind of perishable, because after each earthquake many of those are destroyed. And so there’s a fundamental feeling within the Japanese scheme of things that nothing is permanent.


DUBNER: So that makes sense, and it might help explain why Japanese homes depreciate so much and so fast. But as Jiro Yoshida tells us, there’s another earthquake-related explanation.


YOSHIDA: So the deep question is why do structures depreciate so fast and why do people have to demolish these old buildings so soon, and actually one very simple answer, and in a sense an uninteresting answer to that is the revisions to the building codes. And revision to the building codes especially with respect to earthquake resistance standards, okay? So in the past, the building codes in Japan have been continually revised after major earthquakes.


DUBNER: It began nearly a century ago with what is known as the Great Kanto earthquake.


YOSHIDA: And that Great Kanto Earthquake destroyed over 500,000 houses in Tokyo. And that was a huge, huge disaster. And after that Great Kanto earthquake, the building code introduced earthquake-resistance standard. And then those earthquake-resistance standards were updated in 1950 after Fukui Earthquake, in 1971 after Tokachi earthquake, in 1981 after Miyagi earthquake, and in 2000, most latest in 2000, after the Hanshin-Awaji earthquake.


DUBNER: So as new earthquake standards were put into place, older buildings were decreed unsafe. When a property was sold, the house would be torn down and a new house put up. But everyone we talked to for this story – Richard Koo, Jiro Yoshida, and Alastair Townsend – they all point out that today, even homes that easily meet earthquake standards, are still demolished when they are sold. Many of these homes, Townsend says


TOWNSEND: …exceed the quality of just about any other country in the world, at least for timber buildings. And so there’s really no reason that they should drop in value and be demolished.


[MUSIC: The Mag Seven, “Jive Turkey” (from Black Feathers)]


DUBNER: So there’s no reason – except, maybe, fear of earthquakes, as rational or otherwise as that fear might be:


TOWNSEND: I really feel that the risk of earthquakes to single family homes is very much overstated, and it’s partly a way that housing companies, house builders, market their houses by instilling, effectively instilling fear within their prospective customers by making so much of seismic technology, most of which redundant. By the time that you have skinned a house with structural plywood, it’s sufficiently cross-braced to sustain an earthquake.


DUBNER: So think about this for a minute. If you buy a house, and you knock it down to build a new one because you think the old one isn’t safe – and if you know that the people who eventually buy that house from you will do the same … how much money and time do you think you’ll invest in taking care of your house? Richard Koo calls this the vicious cycle of the Japanese housing market:


KOO: Maybe they will keep their rooms tidy and clean, but externally, I mean once the house is built it’s never repainted again and a lot of external things are allowed to dilapidate, deteriorate, and then 20 years, 30 years the whole thing is torn down and another one is built in its place. So it’s kind of a vicious cycle, right? If you expect the house to last only 20, 30 years you’re not going to put much into maintenance. And as a result, the house really lasts only 20, 30 years.


DUBNER: Alastair Townsend has seen this same lack of maintenance.


TOWNSEND: That’s nowhere near as developed as in the U.S. where you have massive stores like Home Depot and Lowe’s where people can go and buy every part of the house. And it seems like many people in America are confident to build an extension onto their home, or finish the basement, or remodel a room. In Japan that really just doesn’t happen because part of that is there isn’t an incentive to maintain the house.


DUBNER: All right, so we’ve identified at least what seem to be several legitimate reasons for why Japanese houses don’t hold their value over time. You might just say that – well, things are different in Japan; it’s not necessarily worse. But Richard Koo disagrees. A few years back, he co-authored a paper called “Obstacles to Affluence: Thoughts on Japanese Housing.” The paper argued that the habit of treating homes as disposable is extraordinarily wasteful, and that it has contributed to Japan’s long economic slump.


KOO: So you tear down the building, you build another one, then you tear down the building, and you keep on building another one, you’re not building wealth on top of wealth. It’s a very poor investment. Compared to Americans or Europeans, or even other Asian countries where people are building wealth on top of wealth because your house is a capital good. And if you do a certain amount of maintenance you can expect to sell the house at the higher price. But in the Japanese case once you expect to sell it you expect to sell at a lower price 10 or 15 years later. And that’s no way to build an affluent society.


DUBNER: So we’ve come full circle. At the beginning of this story, when we heard about the huge demand in Japan for new houses, and architects, we might have assumed an economic boom was the cause. But not only isn’t there a boom. The ongoing slump – at least according to Richard Koo – may have been caused in part by Japanese attitudes toward the housing market. Now, if you’re an American or a Brit who suffered during the housing hysteria of the past decade or so, the idea of not locking up all your wealth in a house might be appealing. But the opposite of hysteria is not necessarily Utopia. It may in fact be its own sort of madness – which Alastair Townsend, even after six years in Japan, still can’t comprehend.


TOWNSEND: Ok, it’s one thing if it’s about, I don’t know, buying shampoo—but it’s not. This is like people’s biggest investment in their lives, and the Japanese are basically throwing it all away.


[MUSIC: Josh Bernasconi, “Cops In The Water”]


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  1. Lord says:

    Structures depreciate, even in the US. Maintenance can slow this, but functionality still suffers. The illusion is that homes appreciate in the US. They don’t. Land appreciates and remodeling adds value and without these they would be less valuable. Population decline reveals this as stable or falling demand eliminates land appreciation. Tell anyone in Detroit housing appreciates. The most expensive homes of an era will generally hold their value better but even these suffer. The real difference is likely two items, the cost between remodeling and rebuilding, and availability of new land to build on. Remodeling is often more expensive and leads to less satisfactory results than rebuilding but can be done in smaller chunks and as necessary. Most homes can use remodeling after 30 years or so. Much of the US has new developments on the outskirts that often make moving less expensive than remodeling. This is less true of metropolitan areas where commuting becomes too costly though Americans are probably more likely to migrate in and out of metro areas over their careers. Japan is more urban and I expect move less. I expect land is probably held within families for much longer periods there.

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    • James says:

      Nor is this practice unknown in the US. In Silicon Valley, for instance, it’s not uncommon to buy a ‘scraper’ house built in the ’60s or ’70, demolish it, and build something fancier on the lot.

      Indeed, when I consider the amount of work I’ve done upgrading insulation, windows, and HVAC of my ’60s house to reasonable standards, I wonder if I wouldn’t have been better off scraping it and putting a modular home on the existing foundation.

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      • steve cebalt says:

        In my experience, the older US housing structures are such a money pit that the notion of creating ones that meet current standards and replacing them every 20 years or so seems appealing. More like we do with cars. As an example, a couple could get married (or not) and raise kids, then 20-25 years later doze their larger, increasingly inefficient home for a brand new smaller one that is 20 years newer in terms of technology and efficiency, and which matches their evolving shrinking space needs perfectly. I am not sure that the fact that Japanese homes lose resale value is such a bad things economically when one factors in all the dynamics of new vs. secondary markets in an economy. People buying their own home as an investment vehicle are often disappointed.

        The factor that is often a wildcard in US housing is often sky-high property taxes, though! Because those are bundled in with mortgage payments, many people pay little attention to a tax cost that is often 25% of the mortgage payment (in my city). But I digress, just a little. …

        For those reasons, I now rent a very small low-rent apartment in a low-tax rather downscale area. Four walls and a roof and low crime. Life’s much better than it was in my big old house, since I have my face in front of a screen or a book most of the time anyway — like many Japanese, I would guess.

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      • Phil Persinger says:

        James & Steve–

        After scanning the links provided above, I find a bit of truth in almost all the posts here: geology, architectural tradition, religion (both animist and Buddhist), financing, taxation, building codes, etc.
        One could almost believe it economically responsible for the Japanese to knock down houses as soon as possible or, at the latest, just before re-sale of the land.

        Still, I wonder about the value in isolation of a comparing housing stock in the US with a country which saw its major cities (but not Kyoto) leveled in WWII. The Koo/Sasaki paper addresses this to an extent by occasionally throwing in numbers for UK and France. Maybe we need to see some additional work for western Germany w/ Japan– or Boston w/ Richmond for the period 1865-1930.

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    • valar84 says:

      Good post. I would also add that in many localities, destroying a building and rebuilding is a very complicated process, which requires a lot of permits from the municipality. Plus, strict Euclidian zoning often only allows rebuilding a building that is essentially identical to what used to be on the site. You can’t replace a single-family house on a quarter acre lot by a 4-story condo building in most cities, it’s illegal, you need a zoning derogation and then the NIMBYs will get out to stop you. Oftentimes, you can’t even replace one single-family house by two smaller houses on the same lot!

      The result is that it is often way too expensive to replace a building unless the original building was really scrap and excessively cheap. If you try to replace an average 40-year old house, since you can only replace it with another similar house, the result is that the new house will have to absorb the residential value of the old house in its own price, which makes the new house typically too expensive for the class of people who used to be able to afford the old house, only much richer people will be able to do it. Which means that middle-class housing can only be replaced by rich housing. But there is no way for middle class housing to be replaced by new middle class housing.

      I think the Japanese are ahead of us on this. Their civilization is thousands of years old and they have been space-constrained for nearly as long, they know that buildings don’t last forever. In North America, we don’t know how to do actual urban renewal (not talking of “destroy a neighborhood to build a freeways” but actual renewal), when population increased or we come to not like a neighborhood, we tend to build a bit further out because there’s a lot of land. We have not come to terms with the fact that cities should evolve and change over time, and we still have zoning to try and preserve neighborhoods in their current state in formaldehyde forever.

      Oh, as for land in Japan, actually a lot of Japanese rent the land, they do not own it. They rent the land then build a house on it.

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      • B Sherm says:

        I am a non-Japanese westerner living in an urban neighborhood of Tokyo where over the past few years I have seen so many houses in my neighborhood get knocked down and rebuilt– most of the time, a one-family home is replaced with apartments and/or a smaller one-family home with apartments attached.

        The rental income from the apartments pays for the mortgage on the new, modern house while the land stays within the family.

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    • Gareth Andrews says:

      The problem–in my view–with your perspective has to do with the value of the land vs. the building. We cannot assume that the same ratio that we assume here works also in Japan. We’d need to ask, say, the equivalent of a CPA in Japan.

      In the U.S., it’s assumed that the land’s value is roughly 1/3 of the value of the property…for the purpose of taxation and accounting. Land is much scarcer in Japan. If it’s the case that Land accounts for, say 2/3 (or more) of the value of a property in Japan, that changes the way the values of property change.

      At that point, the chief obstacle to building new v. buying existing is the cost to design and construct a new house v. the cost to refurbish an existing house. It’s hard to believe that the cost to design and construct a new house competes well with refurbishing an existing house.

      It’s at this point that it’s probably safe to conclude that spiritual/cultural biases would be behind this trend.

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      • GrandlordMatt says:

        I don’t think the land value is that important, and besides, “1/3 of the total cost” is an awfully vague statistic. The value of land would vary wildly from rural to urban locations within the USA. For example, a 600SF flat in a small town in Iowa would cost roughly the same to build as a 600SF flat in Manhattan. However, the total value of these would vary wildly because the land value is so different. But we don’t see people tearing down structures every 20 years in NYC, do we?

        Whatever the land value is in Japan, that should have little effect on the decision to tear down or not. It is, essentially, a “fixed cost” whereas the cost of building, maintaining, or tearing down a structure is variable. I think it is a much more cultural issue than anything. Japan has laws which make owning used cars very costly, so it is typically better to buy a new car every few years. My Asian friends here in the USA always want to buy new houses. It is a very “disposable” culture.

        Now the interesting question to me is how much cheaper are their buildings if they are designed to only last 30 years instead of 100 or so?

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      • B. Sherm says:

        Here is a good example of actual open land in western Tokyo in a relatively good area.

        The land measures 84 sq. meters (about 900 sq. feet)
        The land cost is 42,800,000 yen or about $400k.
        The house that can be built on the land is estimated at a cost of 16,000,000 yen or about $140k.


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  2. Lord says:

    One other thing is Japanese housing is so much smaller, space is a premium, leading to less flexibility to adaptation to change and less cost to replace. Larger spaces can more readily be adapted to new uses but are also more expensive to replace.

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    • Jim says:

      I think London has a higher population density than Tokyo. http://www.weather.com/health/worlds-most-densely-populated-cities-20140225. Outside the great urban areas of the Kanto and Kansai plains, much of Japan is quite rural.

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      • valar84 says:

        Even rural Japan is much denser than you’d expect. They may be mostly single-family housing, but they’re built compact, with 30 to 50 dwelling units per hectare (12 to 20 dwelling units by acre) and 6 000 to 10 000 people per square kilometer (15 000 to 25 000 per square mile) in residential areas. I calculated these myself using Google Maps and official population statistics.

        Note also that half the Japanese population lives in the three biggest metropolitan areas (Tokyo-Yokohama, Osaka-Kyoto-Kobe, Nagoya), of which half (so 25% of the population) just in the Greater Tokyo region. Yes, Japan has a lot of undeveloped areas, but that’s because it’s a very mountainous country and the Japanese largely do not live on the hills and mountains, they stick to plains and valleys, when there is a hill in an urbanized area, expect it to have a shrine on it and nothing else.

        So Japan is a very urbanized country. The parts of the country that are inhabited tend to be densely inhabited, the parts that are not inhabited have mostly untouched forests. That’s what urbanization is: concentrating people, leaving much of the country free for agricultural reasons or as natural preserve.

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      • osarusan says:

        Don’t let the term “rural” fool you. I live in a very rural part of Japan and it is extremely densely populated — as much or moreso than the suburbs of NJ that I grew up in.

        “Urban sprawl” takes on a whole new meaning in Japan as well. In the US you get a few miles outside of a city center and you’re into smaller, less dense buildings and suburbs. In Japan, the ultra-dense, hi-rise apartment complexes start appearing more than an hour before you actually reach the city proper.

        Coming from the US, I expected small, packed cities separated by swaths of commercial farmland, like much of North America is. In reality, most of Japan is just one endless urban zone with very little let-up in the density of buildings, separated here and there by uninhabited mountains. “Rural” farms here are generally about the size of a typical plot of land in an American suburb.

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    • Geoffrey Craig says:

      In rural Japan (Yamanashi prefecture) housing looks very cheaply built. I was surprised by such low quality housing in a developed, advanced economy. Friends who lived in Tokyo had similar complaints about the housing there: tiny, little or no insulation, poor AC and heat.

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      • Scott says:

        This is going to change in the coming years as the Japanese government is mandating that construction companies build “Net Zero Energy” homes. By 2020, the government will set a standard for this level of efficient homes and then all construction companies will have to meet the requirement going forward from 2030 or cease construction.
        A “Net Zero Energy” house is one that produces as much electricity (usually through solar panels) as it consumes.

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  3. Paul Wujek says:

    Originally Japanese housing was made from paper and bamboo. A typical house built that way would be riddled by termites and other insects after a few years.

    Because those houses were so simple and cheap to construct they would be replaced often.

    Current houses last much longer but the culture persists.

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  4. Al says:

    Another explanation that wasn’t discussed is the spiritual aspect. The Japanese are famously known for being a widely atheistic population but what I’ve seen in over 14 years of living here is that many people have some sort of belief in the soul or spirits which exist after death. From my conversations with people about housing and used cars one thing that is mentioned a lot is that they don’t want to buy used because of the “bad luck” the property might have from the previous owner or their spirit. For example, if someone dies in an apartment, the landlord is required by law to disclose that information and since most people don’t want a place like that, the room is heavily discounted, around 50% I’ve heard. If something bad occurred in a house, like child abuse or alcohol abuse, these “spirits” would also pass on to the next owner.

    So I think all the other aspects that were discussed are relevant, but I wouldn’t leave out the spiritual one.

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    • Hiroko Bretz says:

      Very true. I grew up in Japan and when I first moved here in the US, it was a huge culture shock for me that people live in 100-year-old houses like it’s completely normal. It was just way too spooky to think the original owners must be dead by then but their spirits might still be around in the house. After living in the US for 16 years, that spiritual aspect of me is gone and now I can clearly see why it was an irrational feeling. But at the same time, I understand why Japanese people prefer new houses for that reason.

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      • Joseph says:

        And yet plenty of Japanese families have > 100 year old homes. Sure it’s nothing like San Francisco but there are plenty of Japanese families that have houses that have been passed down 5-10 generations. I’m not saying it’s common. I’m only pointing out that having an old house isn’t strange. In fact all my friends’ families that have old houses are basically considered rich.

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      • Hiroko Bretz says:

        @Joseph, other than shrines and temples, I have never seen houses that have been passed down 5-10 generations in Japan. It’s very possible I just don’t know. Are you talking about Japanese families in the US or Japanese families in Japan? Because they are 2 different kinds of people. I have a feeling that most Japanese people in Japan don’t know that ordinary houses can last that long with proper maintenance. It was certainly the case for me.

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      • MIguel Arboleda says:

        @Hiroko, I grew up in Japan from the 60’s and have lived here for for 33 years over a span of 45 years. I’m a little surprised by your statement that you have never seen houses that have been passed down 5-10 generations. Aside from the big old estate mansions (especially in the outskirts of the big cities, where former big land owners still keep their big traditional houses, there are also the very old farm houses, that I’m certain you have often seen. The farm houses… especially the thatched kayabuki houses… are getting scarcer and scarcer, but 30 years ago there were many, and some of them were over 500 years old.

        A huge difference in approaches toward building have to do with the difference in how Japanese (and Asians in general) tend to look at time and how we live in it. In Japan, “permanence” is not part of the mindset. Nearly all Japanese art reflects this, and throughout history Japanese have always built their structures to be easily replaced or renewed. The old modular building system, with all parts standardized, is part of this, and every part, like tatami mats, paper for the sliding doors, wall studs, or roof tiles/ cedar shingles are standard size and can be easily replaced. So are things like the replenishment of the thatched roofs of the ancient kayabuki houses. Even the native religion, Shinto, reflects this: Ise Shrine is rebuilt every 20 years. The rebuilding is integral to its design and philosophy.

        These days all the old structures are disappearing, as are the old building traditions… mainly because the once-poor farmers have become affluent and can now afford to replace their old houses, which were drafty, cold, and dark. Tatami is not as common as it once was. The only thing truly standard from the old traditions in the housing designs is the “jo” standard of sizing rooms according to the layout of tatami mats. Everything else has been modernized, and likely most young Japanese have rarely or never seen the very old houses, if they grew up in places like Tokyo. But the sense of impermanence and renewal is deeply a part of Japanese thinking, feeling, and culture. It wouldn’t be Japanese if it became a culture based on notions of permanence. Their most beloved festival, Hanami (cherry blossom viewing), is all about impermanence. Japanese culture is for the most part preserved in the rituals, ceremonies, etiquette and manners, and the way people speak and interact with one another, which have a definite structure and mutually understood link to the past. That is where the “permanence” lies, not in the human-built physical world.

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      • Miguel Arboleda says:

        I should add that in a land with as many disastrous earthquakes, tsunamis, landslides, floodings, and volcanic eruptions as Japan gets, building “permanent” structures doesn’t make a lot of sense.

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    • MItch says:

      An American friend of mine in Japan got a steal on a high-rise apartment in central Tokyo because the previous owner jumped to his death from the balcony.
      Pretty creepy, but a deal is a deal!

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  5. cainsian says:

    But think of all the jobs for architects and builders! Quick! Break a window so someone has a job!

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  6. CdrJameson says:

    Coming from the UK, I’m pretty sure nobody here would buy a house that wasn’t expected to last literally forever.

    Which is odd really as it’s buying the land, or rather the permission to build on the land, that actually represents most of the value.

    I think we tend to think of new houses as somehow shoddy, whereas with older houses if it’s been standing there for the last three or four hundred years its unlikely to fall down now.

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    • FDUK says:

      Who would buy a new house in the UK. they are much smaller, with smaller gardens and cost 10-15% more than an old house. Old houses have more cachet too, especially those over 50-100 years old.

      In my town the best houses are over 100 years old, with poor insulation but they have premium prices.

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  7. moichigaijin says:

    maybe another small factor to consider is that in japan, people tend to keep more money in savings

    in the US there may be a small illusionary influence, that keeping a house is a sufficient means of keeping savings

    perhaps it is also good to keep in mind that most families don’t live in houses, rather in apartment buildings. many of which are quite old

    anecdotally, when i searched for a new home, my friends strongly encouraged me to get the newest place possible, so ensure earthquake safety. and getting an older place was generally not desirable

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  8. Joe Dokes says:

    I would disagree with the architect. Although Japanese building codes might be among the highest in the world, the quality of their actually their tradesman is often substandard and as a result much of Japanese home building is shoddily constructed.


    Clearly that is simply an anecdote, but I believe that this is closer to reality.

    As to other comments about a house depreciating and it being the land that appreciates. This is certainly true to some extent. But clearly homes built during certain periods and in certain styles increase in value simply to their unique characteristics or style.

    The same is true for cars, the right car well cared for will under go a depreciation for a while and then if it becomes desirable will begin to appreciate in value because of its rarity and desirability. The same is true of homes, yes the underlying ground will also appreciate but a Frank Lloyd Wright home next to a 70s tract home will have a higher value (all other things being equal).

    Living in a historic home has its own unique set of challenges. Yet, building poorly is an environmental waste, and it’s in society’s best interest to build durable and efficient homes.

    Finally, one thing not mentioned in the article is the Japanese regulation structure that encourages consumption. I don’t know if the same applies for homes but for autos there are a variety of laws that encourage Japanese consumers to replace cars more frequently. This is why used engines for Japanese cars are readily available at very low rates in the US.


    Joe Dokes

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