As a young, potential homeowner in the United States, making the switch from apartment to your first home is a hefty investment. Unless you've just come out with the next Uber service, you'll most likely find a sweet, previously-owned fixer-upper house to modernize throughout your stay and make the commitment to dead batteries, DIY, and the dividends that result from home ownership. But the low-quality housing stock in Japan is a product of a real estate market that’s very different from that in the United States.
In Japan, the building or structure is thought to be fully depreciated (and therefore worth nothing) after about 30 years for a single-family home and after about 40 years for an apartment/condominium. According to a Freakonomics podcast on Japanese home disposability, 50% of all single family houses in Japan are demolished by the time they reach 38 years old. That’s their half-life. By contrast, in the US, this number is 100 years.
The result is that there’s virtually no resale housing market. When somebody buys a house, it is usually torn down and completely rebuilt. It’s a uniquely Japanese phenomenon.
Since few Japanese homeowners plan to sell the home and flip it for profit, there’s little incentive to maintain the house. “This whole DIY concept that’s super popular here [in the U.S.]—you have TV shows devoted to it, you have Home Depot and Lowe’s and all these things that are devoted to building equity in your home—none of that exists in Japan,” explains Johnny Strategy, pen name of the Japanese art historian behind the Tokyo and New York culture site Spoon & Tamago. “Even making slight modification, changing your wallpaper, painting or remodeling a bathroom—it’s a huge thing that no one usually does [in Japan].”
So why does this happen?
The Freakonomics podcast presents a couple of hypotheses. Some believe that it’s caused by a Japanese fixation with newness. New is seen as pure and clean.
Others believe that it has to do with a building code that is constantly changing due to the high frequency of earthquakes in Japan. 20% of the world’s earthquakes with a magnitude of 6.0 or greater happen in Japan. And so there appears to be a belief that newer homes – with the latest seismic technologies – are the safest.
Whatever the case may be, the fact that there’s virtually no resale housing market in Japan, not surprisingly, produces some interesting outcomes. For one, maintenance and DIY home projects are uncommon. Why invest in your home when it’s not viewed as an asset, but as a disposable good? At the same time, people worry very little about marketability when they are building new. And this is a big reason why Japan is so famous for its radically designed homes. When you’re building only for yourself, you just do what you want.
But most importantly, some (such as Richard Koo, who is interviewed in the podcast) believe that this approach to housing is a huge “obstacle to affluence.” In other words, without a functioning resale market, the Japanese don’t get the opportunity to build wealth/equity in the same way that other countries do. In exchange for living in some pretty rockin' custom home designs, would Japanese home ownership be worth it to you?
Listen to the Freakonomics Podcast here: http://freakonomics.com/2014/02/27/why-are-japanese-homes-disposable-a-new-freakonomics-radio-podcast-3/