« Freakonomics Radio

157. Why Are Japanese Homes Disposable?

2014-02-27 | 🔗
In most countries, houses get more valuable over time. In Japan, a new buyer will often bulldoze the home. We'll tell you why.
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you're an architect, and what you really like to design is single family houses, houses with layer with distinctive, maybe then avant garde features, and you want design houses that will actually get built. So if that's who you are then, for you, Utopia might be Japan. They make a very very we added. Looking all of unguessed. Looking house while one of the top described with white avant garde, radical designs, strange, looking we ll again living in the home is like claiming around the jungle, GM or matrix wallow. There was well for five stories long war was caught in that's the way that the floor space at the fifth level was bigger dead. and the second look, it looked.
very unstable, because its highly eye catching they don't have. Handrails stairways in balconies three story building can be built on the maybe five hundred square feet. They have walls that can open entirely. Closing the house to the outside the design coming very, very sharp or really really unique, even homes that have no windows at all. It was covered in this extra money, That was the least meals complete, eyesore a modern artist, was something to be proud of Ok. So if you are an architect not Can you go wild with the design of japanese houses but even more important there's a lot of work there's a huge demand for new holds dear you Sheeta specializes in real estate economics append State University, he used to on the same issues for the japanese government, so on a per capita basis
The number of architects in Japan is three point eight times greater than in the United States. There are in fact more registered architects per capita in Japan than any other country. Not so surprisingly, there are a lot of construct jobs too, and so in Japan and construct employment, as a percentage of that The population is two point: on times greater than in the United States Summit, set this up alive construction, jobs out of architects and a huge demand for creatively designed homes. So that sounds like you're, pretty typical housing boom yeah. I think you have to dig deeper than that. Alister Townsend is an architect in Japan he'll tell us today the story of home building. There is an unusual wrinkled, 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
genuinely, even though I know a lot about the topic, I'm still sore, from w and my see this is free economics, radio, the pot cats that explores the hidden side of everything. Here's your host Stephen Governor, on today show we talk 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
either a booming economy or a growing population may be both 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 continues to do so. The government says the japanese population will decrease by an astonishing thirty percent by the twenty sixth. What does this mean for housing? Japan has an abnormally high vacancy rate, estimated to be in the mid high teens seed. Think somebody vacant homes, there wouldn't be a lot of new home building, you'd. Think there's someone was looking to buy a house they simply by one, maybe freshen up and move in. That's not what happened.
Joe, you sheeta again. According to an engineering study, approximately half of houses are demolished before thirty eight years of a building age in Japan. Ok, did you hear that half of all homes are demolished before their thirty eight years old? So basically, that is the half life of housing stock in Japan. So half life of housing stock in Japan is thirty. Eight years, in contrast, the half life in the United States is approximately a hundred years. There is a huge difference, so more than sixty percent of all japanese homes were built after nineteen. Eighty now why would they be again? You might think it's because of a baby boom or a growing economy, but Japan doesn't have either those the reason that so many not very old homes in Japan are knocked down seems to be this. They ve lost there are you. In my estimation, the structure fully depreciate
it's after thirty years for detached houses and after forty years for condominiums its way to really fast that's right. A home in Japan loses its entire value after just thirty years or according to other studies, missiles. Fifteen years now, that's the house itself, not the land of a land values of certainly fallen since their peak little quick history. Here during the last the nineteen eighties land prices in Japan. More than double Richard Coup is chief economist. It no more research is too in Tokyo. Land prices were so high that just the Imperial Palace Garden, the middle of Tokyo being the bubble days, was worth the entire state of California. Back in nineteen, eighty nine, but that bubble burst in property, values have fallen, jury Yoshida again. Since then, housing prices in Japan have been contain.
Ellie decreasing, except for a few years of small, appreciation in two thousand and seven as arm the two. Ninety ninety one price levels, current housing price levels, will be probably forty percent of the pink Ok, so that is a big fall in property values, forty percent off the pig prices, but not like they felt zero. That is, however, essentially what happens to the value of the Physical House in Japan, because only a tiny resale market in Japan for used houses in most cases when a property is sold, the house is demolish in a new one built. This is in direct contrast to most places the. U S. particular we're. Not only do homes keep their value but older homes, with their colonial char, more brownstone character. They are particularly cherish companies are willing to look beyond all of that and just demolish the house, even though it could provide show
turn it could be renovated for a lot less than they would say. Building a new house, Alister Townsend was born in England, grew up in Iowa and returned to England to become architect. Well, I met my wife, whose Japanese, as a student in London and we worked for, A number of years FARC attacks, but since I decided to study architecture, I've always been fascinated by the radical homes that I saw in japanese architectural magazines when they finished their studies in England, they saw that their opportunities would be limited. We decided to leave London because it's actually very hard to build new housing, as a young architect. Most of the commission's are renovation and refurbishment 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 move to Japan in order to get more experience and hopefully build more in Japan, towns and found a huge appetite for new home. You see, advertisements everywhere on the train and on billboards for new housing mercy on television tv programmes in Townsend's opinion, at least the fact. The japanese homes don't hold their value changes. What people are looking for when they hire an architect 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 the client is free to build a house according to their own personal preferences and their own idiosyncrasies
towns and also thinks that with so many architects in Japan, they are all fighting to stand out in a crowd plus which local governments typically dont, regulate. Neighbourhood aesthetics, like they do in many countries, That may help explain all the unusual and Ermengarde houses in Japan, but we saw them answered the more bizarre question why our japanese homes, actually disposable. 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 is really no reason that they should drop in value and beat him up. so why are most houses knocked down when someone buys him coming up on for economics, radio, we try to answer that question. Does it have to do with culture or economics or maybe
It's actually fear. I really feel that the risk of earthquakes to single family homes is overstated in a way that house builders market their houses,. Economics. Radio sponsored by wonder is business movers podcast. When Kosovo will it change their recipe to what they called new Coke in nineteen, five. The backlash was swift and severe, and yet the man who drove the change Chairman Robert Goya's wetter pulled new coke from the shelves. in a matter of months. Wonder is business movers explores boys what is controversial decision and the public response, but the real story of new Coke is far. more human and complex list.
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to your bank account on you reschedule see all the ways Square can health at square dot com slash, go slash. Freak, though nonsense. from W and Y see. This is for economics, radio, here's your host Stephen Dabbler, so we ve been talking about the housing market in Japan, prices have fallen lots and sir Peak, but the law 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 homebuyers do not want used. Why here is Jim Were you she'd again from pending on this issue? People have in many many casual of the vision of casual explanations, for example.
Many people say that japanese consumers are just different German, its consumers, just like a new things, for example the most sacred shit shrine. Its quota is aging and and- and this shrine is massive timber structure, but every twenty years it's torn down and a new identical train is built on a plot next to it, and that is Alister towns in the british american architect living in Japan, and this is something very ingrained within the japanese psyche, which values newness as something that is spiritually, clean and pure. So maybe the hunger for new homes is a cultural appetite, at least to some degree. For example, if we take a look at the second hand, they all used car market even used car.
Are traded really cheaply in Japan compared to other countries. So there's something to it, but it's not the whole thing. Ok, so what else might explain Japan's disposable housing attitude? Let's go back to world were to the most famous? U S: attacks on Japan, where the atomic bombs dropped on Hiroshima and Nagasaki. Both cities were deficit that got thrown at Rob actual report, which the first atomic bomb to Japan rather than by colonel positive. It junior of my having carrying Navy Captain William Parsons of Chicago Design, the bomb as observer and Major Thomas parity of Marks Bill North Carolina, who pull the plug on Hiroshima, be twenty nine dropped, its load of atomic death, which exploded with a force equal to twenty thousand tonnes of the empty. A few days
A second atomic terror was most Nagasaki, but you have dropped a lot of non atomic bombs in Japan in a lot of other cities, five months before the atomic bombs. Three hundred American be twenty nines started, dropping more than two thousand tonnes secondary bombs on Tokyo, most of that city was burned to the ground. A hundred thousand people were killed in one million people were left homeless and afterward to when everything was flattened by from bombing, they had to rebuild everything very, very quickly: that's Richard who, from the no more research institute and at that time, bidding pay much
Agent to the quality of thousands they are building is certainly the case that, after world war to many of the houses that were built during the boom were shadowy, constructed, Alister Townsend again they lack insulation and are generally very cold. They have heavy tiled roofs which make them a liability and earthquakes. So it's on stand above that those houses are being replaced what are you see why the first round of homes built in Japan after the war were torn down, if not too long, especially as a country, starts to get richer, but there's another factor that led the Japanese to think of their homes as non permanent earthquakes. Twenty percent of the world's earthquakes of magnitude six were great happened in Japan and because of that history, japanese I've come to view
HU, the house's building structures in general, ass kind of perishable, because after each earthquake and many of those are destroyed These are fundamental feeling within japanese scheme of things that nothing is permanent. That makes sense. might help explain why japanese homes, depreciate so much and so fast, but is Bureau Yoshida, tells us there's another earthquake related explanation, so that the question is: why do structures We share so fast and why do people have to demolish these or building so soon and actually one very simple answer and ineffective Uninteresting answer to that is the review Instead of building codes
and revision to the building codes, especially with respect to earthquake resistance, Saunders a delay in the past. The building codes in Japan have been continually revised after major earthquakes. it began nearly a century ago with what is known as the Greek Canto earthquake and that great country earthquake, destroyed over Five hundred thousand houses in tokyo- and I was a huge huge disaster and off that great condo earthquake, the beating coding, the Deuce Earthquake Resistance Standard and then there was an earthquake register. Standards were updated in nineteen fifty, after a victory of big in ninety, seventy one after two catchy earthquake in the eighty one after me, Oghee earthquake and in two thousand most latest into a thousand.
after hushing allergy earthquake, so is new earthquakes. Standards were put into place. Older buildings were decreed anew safe when a property was sold, the house would be torn down in a new house put up, but everyone we talk too for this story, Richard Coup, jury, Yoshida and Alister Townsend. They all point out that today, even homes that easily meet earthquakes standards are still demolished when their sold. Many of, These homes Townsend says, exceed the quality of just about any other country in the world, at least for timber buildings. And so there is really no reason that they should drop in value and be demolished So there's no reason except maybe fear of earth.
Wigs and rational, or otherwise, as that fear, maybe I really feel that the risk of earthquakes to single family homes is very much overstated in its partly away that housing companies House builders market, their houses by instilling effectively instilling fear within their perspective customers by making so much in a seismic technology, most of which is redundant by the time that you have skinned house with structural plywood it sufficiently cross braced sustained in earthquake? To think about this for a minute, if you buy a house- and you knock down to build a new one, because you think the old one isn't safe and if you know that the people who eventually will buy bat, how from. You will do the same, how much money and time you think you'll, invest in taking care of your house. Richard coup calls this the vicious site.
of the japanese housing work. Maybe they will keep their rooms tidy and clean, but externally one thousand spill. It's never repainted again a lot of extra, things are allowed to dilapidated deteriorate and then twenty thirty years it's all holding 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 the last only twenty thirty years, you're, not gonna, put much into maintenance and, as a result, the house. Really. Last only twenty thirty years, Alister Townsend has seen the same lack of maintenance nowhere near as developed as in the U S where you have massive stores like home Depot and lows where people can go and buy every part of the house, and it seems like many people in America
our confidence to build an extension onto their home or finished the base, men or remodel a room in Japan. It really just doesn't happen because part of that is There is an incentive to maintain the house yeah. yeah arranged. So we ve done a fight, at least what seem to be several legitimate reasons for why japanese houses don't hold devalue overtime. Now you may just say that. Well, things are different in Japan, it's not necessarily worse, but Richard to 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
It has contributed to Japan's long economic slump. So you did on the building, you be another one. Until then, the really you keep on building another one you're, not building on top of wealth? Those are very poor investment. Compare the Americans are Europeans, or even other asian countries, where people are building wealth on top of wealth, because your house is a Kapital good and if you do in a certain amount of maintenance. We can expect this the house at the higher price, but in the Japanese, once you buy, you expect to sell that lower price than fifteen years later. That's no way to build and affluent society so we ve come full circle at the beginning of this story, when we heard The huge demand in Japan for new houses and architects
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 Coup, may have been caused in part by japanese attitudes toward the housing work. Now, if you're an american or Brit who suffered during the housing hysteria 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. Alister Townsend, even after six years in Japan, still can't comprehend. Ok, it's one thing. If it's about, I don't know, buying shampoo, but it's not she's, like people's biggest investment in their lives and deed Companies are basically throwing it all away
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Transcript generated on 2021-03-13.