Why Use the Best Lumber in a House That Won’t Last?

(Photo: Emilian Robert Vicol)

(Photo: Emilian Robert Vicol)

A Freakonomics Radio listener named Kevin wrote in response to our recent episode called “Why Are Japanese Homes Disposable?” First, here’s a quick summary of that episode:

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 Jiro 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.

And here’s what Kevin had to say:

I used to work building really expensive houses in Canada. The really rich people would buy A-grade lumber to build their houses, which would otherwise go to building furniture or things where the quality of the lumber really “matters.” Good lumber is nice to work with but it’s not really necessary to put perfectly straight studs in your walls. Any good house framer could tell you that as long as you accommodate the slight imperfections in the wood and pick the right pieces for the right purpose, it is fine.

Anyway, there were a few houses I worked on where we got J-grade lumber, which is lumber that is destined for Japan. It is a grade above A-grade that you can’t even buy at a lumber yard. You have to know someone at the sawmill and buy it directly from there. The J-grade lumber is perfect. You don’t have to check for anything because it is all straight and knot-free. You could make beautiful furniture with it if you were inclined. We were making houses that were designed to last at least 100 years at least. It’s unfortunate then, that all the best lumber is going into houses that will be demolished in 38 years.

I think the argument was that the cost of shipping the lumber was at least the cost of the lumber itself, so it made sense to buy the best lumber possible considering the high transport costs. Maybe it has something to do with currency differences as well or maybe it takes less lumber to build the smaller houses. Regardless, the best lumber in Canada (and likely the U.S. northwest) goes to Japan so they can throw it away in 38 years. Thank you, capitalism.

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  1. Mike B says:

    For decades all the best American old growth Redwood was being shipped to Asia for various “disposable” uses. The lumber industry was in this mindset of cut as much as they could and sell it cheap. I knew some people who got involved with the lumber regulatory battles back in the 80′s and I would in no means describe them as environmentalists, but were never the less infuriated that our best wood was being sold overseas for a pittance.

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  2. Mateo says:

    Summed up in three words: “Thank you, capitalism.”
    Real creative, Kevin.

    Do they really throw it away, or do they recycle it in any way? Would be nice to know.

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    • Jay says:

      Good question, one I didn’t know the answer to so I did a quick google for the heck of it, found:

      http://nett21.gec.jp/Ecotowns/WRT_Eco-towns.pdf

      Glancing it over, I found a few remarks
      Wood Recycling:
      “The manufacture of recycled plywood was suspended in 2011 due to insufficient profitability”

      Paper Recycling:
      “Through its waste paper recycling business, the company actively promotes regional
      recycling activities and strives to build a resource-recycling society. ”

      I’m cherry-picking here and it doesn’t necessarily rule out all re-use systems but may give an indicator of what recycling looks like in Japan right now.

      However, I live in Canada and I can say that due to the last decade-and-a-half of trade deals with the US, we’ve focused on exports to different countries. Right now even with shipping costs we can probably produce quality lumber at lower prices than localized recycling can in Japan. We just have so much of it.

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  3. Greg Heslop says:

    This is the Alchian-Allen Theorem. EconLog’s David R. Henderson puts it well here: http://econlog.econlib.org/archives/2014/04/freakonomics_di.html. Because transportation costs do not vary with the quality of the lumber, high-quality lumber is cheaper relative to low-quality lumber when transportation costs have been added.

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  4. Ian M says:

    Who builds furniture out of woods like spruce?

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  5. Shane L says:

    Is there any reason why this excellent wood in demolished Japanese buildings must be unusable? Might it not be recycled into furniture or sculpture, I wonder?

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  6. burt says:

    N amer homes are built with balloon frames also called Chicago style. It usesa lot of wood vut one of the advantages of this is that it can accept small tolerance errors. Japan uses fitted Cons often mortised. This needs better wood.

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  7. Irina says:

    So you are telling me that cheapness is not an insentive to purchasing an older home over a new one?

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  8. Herman Ramirez says:

    Where is the evidence that all the ‘A-grade’ lumber is going to Japan? All I read on this entry are anecdotes.

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