by liberal japonicus
A podcast from the Freakonomics folks here asks why Japanese almost always buy a house, tear it down and build another one.
It turns out that half of all homes in Japan are demolished within 38 years — compared to 100 years in the U.S. There is virtually no market for pre-owned homes in Japan, and 60 percent of all homes were built after 1980. In Yoshida’s estimation, while land continues to hold value, physical homes become worthless within 30 years. Other studies have shown this to happen in as little as 15 years.
The podcast (here or a transcript here) gives a few reasons, but it is rather baffling. I'll go out on a limb and suggest that Japanese don't view wealth in the same way as the West. This sounds pretty strange, especially when my wife can (and does) express her feelings about family finances in no uncertain terms, but I get this impression that there is a different conception here, though I can't put my finger on it. Moving into someone's old house, with all their memories, rather than building your own to make your own memories, seems to be something (though we bought a used home and didn't tear it down and my wife has never suggested that we build a new one, but I wonder if it is because she always felt that her home was where she was from and this was just a blip)
This video report, about a Chinese restaurant in Williamsburg that does a no-holds barred New Year's Party, seems to be related, in that you save money, but you don't hoard it. One might object, given that Richard Koo, a Taiwanese-American economist living in Japan notes:
So you tear down the building, you build another one, then you tear down the building, and you keep on building another one, you’re not building wealth on top of wealth. It’s a very poor investment. Compared to Americans or Europeans, or even other Asian countries where people are building wealth on top of wealth because your house is a capital good. And if you do a certain amount of maintenance you can expect to sell the house at the higher price. But in the Japanese case once you expect to sell it you expect to sell at a lower price 10 or 15 years later. And that’s no way to build an affluent society.
However, what I find interesting is that the podcast calls on another Asian expert, Jiro Yoshida, who "specializes in real-estate economics at Penn State University" [and] "used to work on the same issues for the Japanese government" but he's not called on to give a soundbite about how crazy it is. I wonder why?