the simple answer is that they don't. They have recognised that closely networked cities, short commute distances, easy access to public services has significantly more advantages than building your own little castle in the prairie.

You've basically snuck in a tautology in your question. 'Breaking into the middle-class' in the US has simply become synonymous with owning a house, without really asking whether owning that house actually provides people with material benefits to begin with.

Like Switzerland, Germany or South Korea among some other countries Japan is very much a nation of renters. This has arguably saved them from some very grave problems.