Your disposable housing Friday open thread

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?

Comments

[Countme-In]

Scrape-offs are more and more common in Denver -- gigantic square footage homes on small lots, their windows within an arms-reach distance of the neighbors'.

And now, tiny homes (120 sq ft) for those who can't afford more; they are being used to house the homeless in some experimental programs in various cities. Natch, the neighbors, probably living in the scrape-offs don't like the looks of that idea.

I could see living in one when I reach a certain age, but in the woods, like a hobbit.

The tiniest home I ever looked at as a possible living arrangement was outside the small Ohio town where I attended college. I answered an ad for a rental for the next school year and out I drove to a farm, where the taciturn farmer led me down a path to, well, a chicken coop. Yup, he'd converted his coop into a rental unit. A foyer (duck your head) and a combination bedroom/toilet/hotplate shelf.

Bout 14' by 7'.

The toilet was smack dab right up against the head of the bed, like in a jail cell.

The price was right and I needed the eggs, but I had a creepy feeling I was supposed to provide them myself ... somehow ... and store-bought might be frowned upon by the above-mentioned farmer.

I just can't sit that long. Places to go, people to see.

That and the thought, in the event of romance, of leading a college coed down the path by flashlight to my "roost", just we two chickens and the toilet, quickly persuaded me this was a bad idea.

The fox inviting the hens INTO the hen house seemed a little impetuous, even for the early 1970s.

And now this, because it's so much fun:

DKos keeps a running diary of gun mishaps and accidental gun deaths and injuries.

http://www.dailykos.com/story/2014/02/27/1277815/-As-SC-considers-allowing-guns-in-bars-15-people-are-accidentally-hit-in-bars-GunFAIL-LVIII

This week hit the spot. Among the dozens of instances of constitutional nincompoopery was the Colorado State lawmaker in favor of concealed carry and against the mild restrictions we recently established out here who conceal carried into a legislative committee meeting, because you never know when a movie showing might break out and the bullets start to fly, and then, um, left his weapon under a table in his man purse.

It was discovered some time later. No punishment, natch.

Then, there are the usual cases of guys in their cups accidentally shooting themselves in the dick while sitting on bar stools in bars called Shooters, the Shot Glass, the Open Wound, Shrapnel's, Stupid's Bar and Grill, the Innocent Bystander, Douchebag's House of Gin and Donuts, Gutshot's, Ted Nugent's Montana Roadkill Bistro, and Zimmerman's, which serves an all-you-can-swallow crowdunken (a crow tucked in side a vulture and then stuffed inside an idiot dressed as a tom turkey) dinner on Thursday nights.

Then, babies in their bassinets and the odd toddler, gunned down in the shank of life, before they are even old enough to register to vote Libertarian.

The upside is that each one these victims' weapons, while they may have killed the gun owner themselves or an innocent victim, prevented at a minimum ten other murders by their mere presence at the scene.

It coulda been a slaughter.

This according to stats made up by F*ckwad Weekly, the in-house organ of the NRA.

Ted Nugent, the noted subhuman pureblood sh8thead, accidentally shot off his mouth last week, injuring dozens and severing the artery that supplies blood to the empty cavity where most people house a brain, and will be laid up for roughly two minutes, because even without his testicles his lips keep moving overtime.

His new interest is stockpiling arms for the inevitable global warming @2080 and the attendant jump in rape incidents. He figures the warm temperatures will put him in the mood when his female fans sneak backstage into his dressing room to show their appreciation for his guitar chops and it'll pay to have some persuaders in hand just in case.

[Doctor Science]

I've formed a theory about this, mostly after a couple of years reading Orchid64 about living in Japan.

The climate of Japan's core Kansai region is like that of the southeastern US, even the Gulf Coast. This means that mold and mildew are, I gather, continual problems.

Traditional Japanese home construction materials (paper, light wood) and home furnishings (cotton, straw) are *not* particularly mold-resistant. I hypothesize that instead of keep up a continual losing struggle against mold, Japanese culture has grown to value new, clean-looking materials for housing, furnishings, and textiles. For instance, there's more of a market for antique kimonos in the US than in Japan -- the Japanese do not expect old textiles to be other than musty.

My theory, which is mine.

[Roger Moore]

I wonder if it's really as unreasonable as you suggest to tear down houses and rebuild. Most of the homeowners I know (including myself) have a long list of major renovations they've either carried out or are planning on. We remodel our kitchens and bathrooms, upgrade our plumbing and wiring, repair and replace the outside, etc. That work tends to be expensive because it has to take place without damaging the structure of the house or unduly disrupting the occupants' lives. Until it's done, we live with a house that we're dissatisfied with. I wouldn't be surprised to learn that rebuilding from scratch is not much more expensive than a thorough renovation, and it gives a house that's completely new and built to the owner's specifications.

Anyway, I don't believe in the whole idea of a house as a way of building wealth, at least on a society-wide scale. A house is not a productive asset, and it does not become more valuable just from sitting there. Far from it; a house requires regular maintenance to avoid falling into disrepair and eventual ruin. The apparent appreciation in a house's value is either from the land it sits on gaining value or an illusion of inflation. The delusion that houses are a great investment that's sure to pay handsome returns is what gave use real estate bubbles, the S&L mess, and the subprime mortgage crisis. The sooner people treat houses primarily as living places the better.

[dr ngo]

Living in Hong Kong, one of the things that amazed me was that they would build an 18-story building (apartment or business, it didn't matter), which was as high as they could go, and then five years later, when the regulations had changed, tear it down to build a 24-story building on the same site! Space was the premium there - since the government deliberately keeps the amount of property in private hands low - and maximizing the return from space was far more important than any consideration of history, conservation, or even building on your own investment.

[Brett Bellmore]

I looked into building one of those micro homes back in the 90's; It had the advantage that I could do it from savings, and not go into debt. Local zoning turned out to prohibit any home under 1500 square feet. I was highly tempted to just build it anyway, behind a bush...

[wj]

Meanwhile (it being an open thread) Russia appears to be designating Crimea as the new South Ossetia. The only question is whether they will also decide to break off a few of the other southern and eastern provinces of Ukraine.

[Doctor Science]

dr ngo:

I notice that Hong Kong, too, is in a climate where mold and mildew must be unavoidable problems. It's possible that people there, like in Japan, have developed an expectation that houses will be short-lived, not something you're going to keep for generations.

[liberal japonicus]

The mold thesis is interesting, though I'd suggest that it may have started like that, but reached a point that Japanese just really really like new things. There is also the fact of cars, which are generally taken off the road after 5 years. This is helped along by the structure of the car inspection, known as the shaken, which includes basic compulsory insurance, which makes it more and more expensive to keep up older cars. The older cars tend to be shipped overseas, with lots of them going to places in the former Soviet Union.

Roger Moore's comments are interesting, though I'm not suggesting that it is "unreasonable... to tear down houses and rebuild". I'm agnostic on the question, though I do admit my US upbringing kicks in sometimes when I'm thinking about our house. I find my reasoning tends to conflict with reasoning I encounter here, so much so that what is reasonable versus unreasonable has become very very blurry...;^)

[bob sykes]

I like the mold idea, too. However, there is an important economic issue with house buying.

Schiller (of the Case-Schiller housing index) believes renting vs. buying is a life-style choice and that buying a house is not an investment. He notes that since 1890 housing prices have increased more or less along with inflation--i.e., they are constant in constant dollars.

But a house retains its value only if it undergoes constant maintenance: roofs, rugs, driveways, appliances, paint, etc. So, even if you paid cash for the house you lose the maintenance costs when you sell. If you borrowed to buy, your losses are substantial.

So demolishing the old and building new might not be much different in economic terms than the usual American practice of maintaining the old. And if the mold hypothesis is true, it might be cheaper, especially since the construction seems to be lighter.

[russell]

LJ, I wonder what the typical Japanese house is like? Are they substantial structures? What kind of materials are used?

What I'm wondering is how the cost of tearing down and rebuilding compares to what it would be in other places.

Do the materials get re-used?

[liberal japonicus]

Well, with earthquake codes, I think they are as sturdy as US houses.

Recently, there is more reuse of materials and tearing down is expensive as it is a lot more labor intensive, especially when it is in a crowded neighborhood.

There is a boom about 'reform', which is the Japanese term for renovation. I saw a couple of programs when I went back to the US the last time, but for the Japanese ones, it is usually someone in a place where they have a lot of memories and don't want to move (usually an older couple where the kids have moved out), but don't want to rip the house down and build another one rather than someone looking to flip the house. Here is a youtube video

http://www.youtube.com/watch?v=FWWTBH95yPs

This isn't the program I'm thinking of, but it is the same type of ending. The costs are listed at 7:37 which are

construction costs 5.3 million yen=
raw materials 3.6 million yen=
Furnishings 2 million yen

10.9 million yen
(note says the design fees were including)

A million yen is roughly 10.000 dollars. Obviously this is a complete renovation, and I'm not sure how costs compare in different regions of Japan. I think this trend is because there are folks with substantial savings, but the market is soft, so they would rather stay in the place and architects are looking at this as a business opportunity.

[CharlesWT]

'Ninjas' and 'skeletons': Japan's eccentric homes find a niche

[CharlesWT]

Housing in Japan

[Fair Economist]

I'll third the idea that Japanese have gotten used to the idea that a 30-year-old house is no good because traditional Japanese homes would be rotting by that point. In addition, when paper is a structural material, you really wouldn't expect it to last that long, at least not in good shape. Traditional materiasl you would expect to last a long time in most places, like stone and brick, don't do well in a region with frequent severe quakes. So, it's a once-reasonable cultural preference that hasn't caught up to the fact that it *is* now possible to build reasonably permanent housing with modern materials.

[Snarki, child of Loki]

Apartment buildings use "modern materials" (structural steel, concrete, etc).

Private homes are much more likely to be of "traditional" construction.

[dr ngo]

Don't underestimate the strength of preconceptions about what's "normal" in life.

I grew up in Southern California, where literally everybody that I knew - and we were economically at the very bottom of the middle class - lived in a house: an actual house, with a yard all the way around it, even if that yard might be only a few feet wide in places. The first time I came East and saw a really fancy upper-class townhouse in Boston (Beacon Hill?) it blew my mind. These people clearly had money, but they lived in an "apartment," which to me was something only the really poor, or college students transitioning in life, had. They were adults: how could they stand it? Why didn't they live in a proper house?

Zoom forward forty years and we're living on the 12th floor of a highrise in Hong Kong, where there are literally more millionaires than private houses. And we're fine with that, because our flat is bigger than most (and rent-subsidized!).

But then I retire to the US again, and the first thing we do is buy a house, because we're grownups, and that's what grownups do.

Autres temps, autres moeurs.

[liberal japonicus]

dr ngo, I agree totally, but I feel that though nothing actually changes one's preconceptions (I visited a friend who lives out in the country and he has a yard and a garden, and I felt this sharp twinge of jealousy and I know that in my heart of hearts, I'd be buying that house if the chance came up), you can, from time to time, step back and realize how random what you like and dislike is. I think that is what they mean when they say travel broadens the mind, in that you realize that you like what you like not because it is the best, but just because you like it.

[Slartibartfast]

I currently live in a house larger than 2500 square feet. I am considering moving into a mobile home (possibly temporarily) for a while in order to accomplish some life goals.

One of which might be building my own house. One in a different climate, with a walk-out basement, on a large-ish piece of land where I can put a barn that also does duty as a place to work out.

I think where you live changes according to local norms, in general, but also according to what you can currently afford. I know: this goes without saying.

I know people who are trying to simplify their lives for various reasons, and so they spend a lot of time looking at e.g. this site, which has some pretty cool examples of very small, economical homes.

Theory being that you spend more time outdoors, once you reduce your indoor space. Or so I would imagine.

[Barry]

Slartibartfast: "Theory being that you spend more time outdoors, once you reduce your indoor space. Or so I would imagine."

I imagine that it's so, in nicer climates. Also, a patio in a nice climate is useable much more than a patio in a bad climate. Where I live (Michigan), I have a deck, but it's not useable for more than five months out of the year. If it were useable for 10 months, my effective living space would be much higher.

[Brett Bellmore]

By the way, utterly unrelated to the topic, but have to say it:

See "A Monster in Paris". We streamed it for our kid, and ended up liking it ourselves. A phenomenally good movie.

I now return you to your regularly scheduled discussion of architecture.

Agree with you, Barry: When I was in Michigan, I had a deck, but it only saw a few months use each year. Now that I'm in South Carolina, even in winter most days we can enjoy being outside. I figure, with a gazebo with fireplace, we'll be dining outdoors even in January.

[Yogi]

Slartibartfast, check out this one: http://www.notsobighouse.com/

I read Susanka's books when they first came out, and used her ideas on and off throughout the last few years of construction.

[clew]

The story I've heard about Japanese urban houses is that their life-expectancy was traditionally short not because of mold, but because of fire. (Calling Robert Frost!) Light, short houses everyone can get out of then seem sensible, as does not building with trees older than the houses' life-expectancy. And then you aren't necessarily wasting money over time.

Rural houses, and of course castles, are built (IIRC) with big timber and rock, and get complicated structural upgrades like heavily built Western homes. liberal japonicus, does there seem to be any split like that?

I wouldn't be surprised if a chunk of the US belief that a house is a permanent source of wealth started in 19th c. England. Stone houses are different! But we build with lighter and lighter stick framing, not least because middling-good stick houses don't last very well. If either `build light and rebuild' or `build heavy and repair' are reasonable strategies, the important thing is to know which one your builder was following.