In North America, owning a home is an asset,
it's an investment, everyone knows this. In Japan, that's not necessarily the case. Japan's population has peaked, is now in decline,
and with a low birthrate and little immigration, it's not set to change. Housing prices are prominently a function
of supply and demand, and every year, supply increases, while demand doesn't. The only logical way for prices to go is down. And when you have homes in places where people
no longer want to live, they get abandoned. You might have heard that Japanese homes are
worthless after 30 years. The thing about that, is that you have to
separate the building from the land. It's the house on top of the land that's historically
been worthless after about 30 years, not the land. That's not to say that the land hasn't devalued. It has. Big time. Since the peak of the bubble in the 90's,
it's gone down significantly. Housing markets are localized though, so while
the Japanese countryside has seen land values continue to fall, land values in the six major
cities, especially Tokyo, has risen in recent years. That's because while Japan's population is
shrinking, Tokyo is still growing. It's set to grow for a few more years before
reversing and going down as well. Now back to that house, the physical structure
that is. Why is the shelf-life only 30 years? Right now, the average age of a demolished
house is around 30 years old. That number, however, doesn't include all
the houses that are still standing, since they haven't been demolished yet. More importantly, that average age doesn't
account for the new standards that have been put into place over the decades and the quality
of new homes built now. It's somewhat similar to comparing the life
expectancy of those born 100 years ago to those born today. If you were born in the early 1900's, you
would have expected to live to about 50, whereas babies today can expect to live to 80. And who knows, with proper maintenance, maybe
to 100. That's all to say that the shelf-life of new-built
houses is a lot higher than the current average age of demolished houses. Wood frame houses built today should last
more like 60 or 70 years. This then begs the question, why have Japanese
houses up to now not lasted very long in comparison to those built in North America or Europe? Japanese houses were traditionally made of
wood. Bricks and earthquakes don't mix well, so
you don't see brick homes in Japan like you would in Europe. So wood it was, but wood doesn't do well in
fire. Back in 1923, Tokyo was devastated by the
Great Kanto Earthquake. "The fires caused by the earthquake burned
the city center to the ground. Over 140,000 people were reported dead or
missing, and 300,000 houses were destroyed." Then there was world war 2 and the fire bombing
of the city. "Much of Tokyo had been laid waste by the
bombings and by 1945 the population had fallen to 3.49 million, half its level in 1940." After the war, the country was quickly re-building,
and creating top-notch housing was not the priority. Then in 1981, following a massive earthquake
in Miyagi prefecture, earthquake standards became more stringent. This meant that any houses built before the
new earthquake codes were not as valued as those built after. While old codes were meant to stand up to
a tremor of 5 on the JMA Shindo scale, the new building code revised it to withstand
upper 6 or higher . The new code, called shin-taishin underwent
minor revisions in 2000 for wooden houses. So every few decades or so in the 1900's,
some major event has occurred that has necessitated the rebuilding of housing stock. On top of safety reasons, another contributing
factor to the short-lived Japanese housing is the fact that wooden houses, for tax purposes,
completely lose all value after 22 years. What are new-build Japanese houses like? Many components are first built in a factory. Now, it depends on the customization and quality
of the house, but even low end homes have the wood precut and then shipped to the location
to be quickly assembled. They do have insulation, and they do have
double pane windows. Because of the earthquake standards, the wood
frames are bolted to the foundation and the homes are structurally sound. Since they're built of wood, the two big factors
for longevity, besides earthquakes, are rot and termites. If well maintained and cared for, experts
say the life span is double the current average age of demolished houses. What about all the homes that have been abandoned? In certain parts of Japan, this is a major
issue. We know that the population is dwindling,
and we know that homes built many decades ago have lost all value, but why have abandoned
homes been left standing, or rather, rotting in place? The simple reason is money. The minute you bulldoze a house, your tax
bill increases six-fold. That's because land with a house on it only
pays a sixth the taxes, and land used for agriculture only pays a 1/3 of the taxes. Not only does your tax bill increase, but
you also get hit with the cost of demolition What often happens is that a parent passes
away, and the children don't know what to do with the house. Demolishing it will only cost money plus add
to their tax burden. Since no one wants to buy the land, the cheapest
thing to do is to simply leave the house there. In other situations, some people will pass
away and have no relatives. There are many homes for which the owners
can't be found. The national government has recently put into
place a law that allow municipalities to coordinate with the tax offices in order to both find
and fine the owners. The law allows the government to revoke the
special tax treatment for homes if they are abandoned. If owners cannot be found, the city is then
able to repurpose the land and building and put it to better use. The municipalities don't generally want to
do this though, as the cost of bulldozing is a drain on the coffers, something that
is shrinking along with its tax base. While abandoned homes are an issue in Japan,
it's really more the countryside and the areas that are not an easy commute to major cities
where you'll find them. Abandoned homes is part of the bigger issue
of vacancy. As of 2013, the vacancy rate sits at 13.5%
nationwide, and it's only set to increase as the population dwindles. Interestingly, in the first quarter of 2017,
12.7% of housing units in the United States were vacant. I wouldn't have guessed it was so high! But in Japan, 13.5% represents about 8.2 million
homes, so that's a lot of empty homes. Of those 8.2 million homes, 39% of them are
abandoned. Now those stats are for the whole of Japan. So let's zero in to Tokyo, which still has
a growing population. Well, the prefecture of Tokyo has 817,000
vacant homes, which translates to a vacancy rate of 11.1%. Within the vacancy rate, there's also something
else to be parsed from it. If I walk around Tokyo, I don't actually see
many houses that appear vacant, but if I look at apaatos or manshons, I can visibly see
unoccupied units. The latest figures from 2016 show that 34%
of rental units in the 23 special wards of Tokyo are indeed empty. That's a really high number, especially since
this is the core of Japan, the core of the Tokyo Metropolitan area. Out of the 817,000 vacant homes, only 14%,
or 114,300 are single detached houses (this is out of a total of 2,207,000 single detached
houses). Since there are over 2 million single detached
houses in Tokyo, that really means only about 5% of them are vacant. So, me walking around the neighbourhood and
not seeing many vacant homes, but seeing every 3rd of 4th unit of an apartment empty makes
a lot of sense. What have we learned here folks? Japanese wood frame homes are built a lot
better than they used to be, which should mean double the shelf-life of the homes built
decades ago. Are the houses disposable? I'd say not much more than any other wood
frame houses built in the US or Canada. The big issue with Japanese housing, rather,
seems to be the ever increasing abandonment rate, especially in the countryside. What will happen to all these units, many
of them which aren't in a state where it's worthwhile to repair them? How will the governments and people left behind
deal with this? This was supposed to be the end of the video,
but I felt I had to address a few last points. In Japan, the resale market is tiny. While about 90% of home sales in the United
States are for used homes, the opposite is true in Japan, where it's only about 15%. Is this because of the Shinto religion? Portions of the Ise Grand Shrine, one of Shinto's
most holiest sites, is rebuilt every 20 years. This is part of the Shinto belief of the death
and renewal of nature and the impermanence of all things. Does this apply to Japanese housing as well? What people can agree on, is that up until
now, homes haven't lasted very long before being torn down. Because people know this, maintaining a home
wouldn't be as worthwhile as it would in Europe or North America, since the resale market
and value of used homes is minimal. Personal anecdote time. I bought a new home in Japan last year, but
why didn't I buy a used one? First off, the price difference between new
and old wasn't that big. This is largely because new homes can be built
on smaller plots of land. I like the layouts of new homes better, they
are more energy efficient, they have new finishings, they are built to the latest earthquake standards,
and come with a 10 year warranty. That's not to mention that it's easier to
get a mortgage on a new home than an old one. Ok, end of video. I'm outta here.
Japanese just also don't see houses as investments, so there isn't some huge investment market inflating everything into a bubble. My dad bought a house for like 10k USD in Osaka.