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.


Mike B

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.

Mateo

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.

Jay

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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Greg Heslop

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.

Ian M

Who builds furniture out of woods like spruce?

Shane L

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?

burt

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.

Irina

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

Herman Ramirez

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

Steve

There is another reason, not mentioned in the podcast, why Japanese houses lose their value so quickly - all the builder's warranties become invalid as soon as the property is sold. Suddenly the house is no longer guaranteed against termites/earthquakes/dry rot, just because the bit of paper saying who owns it has changed hands.

The podcast also failed to mention the recent boom in house 'reform' - varying from largely cosmetic external or internal work to major reconstruction, which, as long as it's on the original foundations, is not taxed at the same rate as building from scratch.

Jason

I am a regular viewer of a Japanese renovation show called "Before and After" where homes are always gutted and rebuilt on (sometimes rebuilt/reinforced) original foundations rather than on new foundations, and have always wondered why. The tax benefit would seem to be a valid reason. As other posters have stated most of the major joist work is mortised and tenoned (sp?) together, which presumably would require better quality wood.

On an interesting cultural side note I work as an assessor (valuing properties for taxation) in a mid sized Canadian city. We had an exchange with counter parts from Tokyo who despite having a larger assessment base in terms of both value and population (by a couple orders of magnitude), have less total property appeals than we do. I would be curious to know why the difference is so huge.

J1

"Thank you, capitalism"

Is there an economic system that would better allocate this resource?

Mattcarmos

Just got a forward to view this by a mate of mine.
I live in Japan and own a home in the Kansai region, just outside of Osaka.
Through my experience of looking for a home over here for the past few years, I can say that a lot of what is written in the podcast and the comments/replies is mere speculation and needs to be more thoroughly researched before jumping to such conclusions.
They should at least clarify which companies are buying this wood. It makes a big difference in the conclusions you can draw from such information.

None of the second-hand homes (ranging from 10-30 years old) I have seen had this "J-grade" timber at all. I checked every nook and cranny, by the way.

In fact, most of them exhibited extremely dodgy craftsmanship/build quality/raw materials.
I am not surprised at all that they get torn down after 30-40 years. They would require some heavy reform work to be usual for any decent period of time.
Hence the popularity of reform shows like "Before After" in Japan at the moment.
Many people living in such homes can't afford to fork out for a new one, and the one they live in is virtually worthless as is.

The only homes this expensive timber would go to is the kind of home that rich people can buy.
Such houses are generally built by well-established housing companies like Misawa Home which, like other major companies in the industry, promotes homes built to last "100 years," a keyword in the building industry of late.

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Roger

How does the person claiming this know that the lumber isn't being used, in Japan, for the amazing furniture he keeps refering to. Perhaps the Japanese make a lot of high end wooden products.

Luca Logi

Japanese people often ask for the best quality and pay for it, even if it does not make sense it is just for the sake of having done a perfet work. They would buy J-grade even if the houses were to be demolished in five years.
I read somewhere that the Tokyo outlet of a top fashion house once phoned their base factory in France that some dress had come with a bit of excess thread on a stitch.
From France they replied: just take tiny scissors and cut it.
Tokyo: this is not good enough for our customers.
France: this is acceptable in Europe.
Tokyo: So you'd better sell such dresses in Europe.

Rarshaiz

Have any of you been to Japan. I was in Okinawa and let me tell you termites termites termites everywhere.

Augustus

The Japanese probably prefer high grade lumber because they traditionally leave a lot of wood unfinished and exposed, so more perfect wood is desirable. I have no idea whether this is still the case, but habits hang on after the reason for them is gone.
As for houses being a short-term thing, I'm not surprised - Japanese houses were typically very lightly built, single story affairs so that in the event of an earthquake one wouldn't be killed when they collapsed or be trapped in a wrecked building. This would lead to the cultural idea that a house is not expected to last. Our culture thinks architecture should last forever, and I agree, but this idea isn't common to all cultures - many South Pacific cultures regarded a used house the same way we would used underwear - it just wasn't nice.
I'd add that it's not surprising that the good wood goes where people will pay for it - people putting up tract housing don't expect it to last, and won't pay for good materials. That's how capitalism works, and at least in this case it's in line with reality. People who will pay for good materials can get them. You don't have to 'know someone' - I'm here because I called my lumber yard asking for decent lumber and he said, "I've got some J grade." It's not even that expensive.

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Augustus

Hey, I just got my hands on some J lumber. It's nice, but not spectacular - it has knots and inclusions. It's not twisted or wowed, but it's just basic decent lumber. If people are building tract housing from lumber several grades down from this ... that's not nice. I don't think there's much to this - some people will pay for nice lumber and they get it. Other people are sold crap houses at inflated prices and they're made from crap.