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Japan’s Housing Market

A Critique by Brittany Edwards

The market for pre-owned homes in Japan hardly exists as half of all homes are demolished within 38 years. For context, the U.S. average is 100 years. The value of a home in Japan depreciates to basically nothing within 30 years— but that does not account for the land value.

Why is it that homes become worthless after 30 short years while the land manages to maintain value?

Japan's Housing Market 1

The quality of Japan’s tinder built homes exceeds that of those built in almost any other country in the world, but there is an abnormally high vacancy rate of homes because bespoke architectural preferences creates a huge demand for new construction. It’s so different from the US standard where older homes not only maintain their value, but grow in value, due to their vintage charm.

Building codes that update the earthquake-resistance standards led to categorizing older buildings as unsafe. However, even homes that meet earthquake regulations are demolished when sold. So the tiny resale market for used homes is partially driven by an overstated risk of earthquake destruction, but in reality it boils down to the cultural norm that most Japanese home buyers do not want used homes. Etched within the Japanese psyche is a value for the clean, pure spirit of newness.This infatuation with newness creates a negative feedback loop where people only expect a home to last 20 or 30 years, so they do not properly maintain the house and as a result, the home only lasts 20 to 30 years.

Japan's Housing Market 2

Maybe it’s a good idea to make a home in Japan, because you can find them very cheap. When I say very cheap, I mean that many abandoned homes ( 空き家, akiya)  are being given away by local governments. It’s also not bizarre to find homes sold at a ridiculously low price point. The caveat to all of this is that a home in Japan is not an investment. You will not be building wealth in its value the way home ownership works in America. If you’re curious about what akiya home offerings look like, you can get familiar with some listings here

What do you think?

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