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Welcome to Japan — Where homes are thrown away after one generation

Philip Brasor and his wife Masako Tsubuku spent years looking for a house to buy in Japan, and after a fruitless search for a pre-owned home, they decided to build a new one. Like many other new homes in Japan, they expect it will be worthless in the next few decades.

“We have no expectation of gaining any value from our home,” said Brasor. “But, of course, most used homes outside of Tokyo will not have any value in forty years. And I think Japanese people have come to understand that, even if they don't admit it out loud.”

Unlike the U.S. and Europe, where houses are often viewed as investments and older properties can gain value for their historic nature, Japan places a premium on new properties that are only expected to last one generation.

“The estimated half‐life ranges from 20 years to 40 years,” said Jiro Yoshida, an assistant professor of business at Penn State University. “It’s much shorter than in the U.S. and other developed countries.”

The expectation that a property will have a short life has become a self‐fulfilling cycle, explains Yoshida. Since sellers cannot receive a high price for a well-kept house, owners don’t spend much money on maintenance, and the houses tend to deteriorate faster.

“It's very unusual to see somebody doing work on their own home, even if it’s just like changing wallpaper or doing very cosmetic changes,” said Alastair Townsend, a Tokyo-based architect. And because of this, “A lot of Japanese interiors tend to be quite plasticky," he adds.

This partly explains the trouble Brasor faced on his housing search. Home after home was built with cheap materials and falling apart.

“Frankly, we were very disappointed in what we saw in terms of quality,” said Brasor. “While the properties themselves were very cheap, the cost of upgrading them to a level we'd want to live in would have been quite high.”

Beginning the short-life cycle

How did the rapid cycle of housing destruction begin? There are many theories.

Perhaps it’s a psychological phenomenon, Townsend suggests. “The Japanese are very fixated on cleanliness and having things new. That’s why things are always individually wrapped and packaged and very sanitized,” he said. “And so the same thing is true with housing ... People don't want to live in a house that has been used by somebody else.”

Another explanation focuses on technological change. Approximately 20% of large earthquakes occur in Japan. After each earthquake, building codes are revised, which makes the existing buildings obsolete and outdated. Currently, about 9 million resident homes do not meet the earthquake-resistance regulations, according to a spokesman for Japan's Ministry of Land, Infrastructure, Transport and Tourism.

"From a legal perspective, many existing buildings become illegal,” said Yoshida. “When technologies advance relatively rapidly like this, a product life cycle becomes short, just as for computers.”

Implications of rapid destruction

Eiji Tomita via archdaily.com
Eiji Tomita via archdaily.com

On the bright side, the destruction allows for a lot of creativity. Since many home buyers don't have to worry about re-sale, they design houses however they want. Personalized structures can be found throughout Japan, from see-through homes to triangle-shaped houses.

And this is great business for architects, which is why, on a per capita basis, Japan has nearly four times as many architects as the U.S.

However, the rapid turnover has several downsides. Depreciation of housing is a particular problem for mortgage credit. To mitigate the issue from the bank's perspective, Japanese mortgages are full recourse, which gives lenders the right to go after personal assets in case of mortgage default. This often means that homebuyers are stuck with the first house they own.

“If you go underwater, you can't just simply hand the keys back to the bank and just have them foreclose on you,” said Townsend. “The bank will go after other assets, including your savings account.”

Moreover, the high destruction rate wastes much needed resources.

”It’s about time for a change,” said Yoshida. “Building technologies were proven to be robust to earthquakes in the last large one. I think it makes more sense to allocate more resources in R&D for an aging society than on new housing construction.”

Follow Justine Underhill on Twitter: @jj_under