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Comment by SpicyLemonZest | Hacker News Reader

> The first thing to note is that in Japan, housing isn’t an investment. It’s a place to live. The country’s slow population growth means that increases in property values aren’t guaranteed

I feel like this is a misleading way to put it. Japanese houses decrease in value, generally quite severely - the conventional wisdom is that after a few decades you might as well just tear it down and build a new one. So there's very real option value you're losing in the Japanese model; if you have to move in a decade or two, you won't be able to get back the equity you put in.

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> Japanese houses decrease in value, generally quite severely

And why shouldn't they? What keeps housing prices high in the U.S. is artificial scarcity. It's the land that's valuable, not the out-of-date structures that exist on it. And the land is so valuable because it's illegal to build enough housing to meet demand in most places.

Ah, how the wheel of life turns. Back before the Lost Decades ( https://en.wikipedia.org/wiki/Lost_Decade_(Japan) ), Japan was a completely different country.

"JAPAN'S 100-YEAR BANK LOANS (FORTUNE Magazine) By Susan Moffat May 21, 1990

"(FORTUNE Magazine) – The Japanese, famous for saving, are now loading their future generations with debt. Nippon Mortgage and Japan Housing Loan, two big home lenders, are offering 99- and 100-year multigeneration loans with interest rates from 8.9% to 9.9%. Borrowers put up their homes as collateral. Such deals represent sound fiscal planning for some families, especially the very wealthy living in Tokyo who, perversely, can almost not afford to inherit a house: Japan's graduated inheritance tax can take up to 70% of a family's assets, including its home. Under the 100-year loan plan, a second generation can move into a deceased parent's home and pay inheritance taxes on only a fraction of the house's value. Most Japanese, of course, don't have such problems. Their challenge is to find a house they can afford, especially if they want to live in Tokyo. The housing crunch there inspired Robinsons on the Sand, a 1989 hit movie that's now No. 8 on Japan's VCR rental list. It tells the story of a salaryman and his family, who are willing to do anything to escape the misery of their tiny rented apartment. The ''anything'' turns out to be living on constant display as a ''model family'' in a spacious model home while potential buyers tramp through. Jealous neighbors bully the children and make obscene phone calls. Before long, one of the two sons turns delinquent, the daughter is killing kittens, and the father ends up homeless in the street. Mom and the kids finally return to their old apartment, where they watch TV in the closet in blessed privacy. So much for that particular family's Japanese dream."

https://archive.fortune.com/magazines/fortune/fortune_archiv...

The 100-year Japanese residential mortgage: An examination

"A recent innovation in the Japanese real estate industry to promote home ownership is the creation of a 100-year mortgage term. The home, encumbered by the mortgage, becomes an ancestral property and is passed on from grandparent to grandchild in a multigenerational fashion. We analyze the implications of this innovative practice, contrast it with the conventional 30-year mortgage popular in Western nations and explore its unique benefits and limitations within the Japanese economic and cultural framework. Through the use of simulation, the conclusion is reached that the 100-year mortgage has failed to increase the affordability of homes. Instead, affluent homeowners are more likely to employ long-term mortgages as an estate-planning tool to reduce inheritance taxes."

https://www.sciencedirect.com/science/article/abs/pii/106195...

Japan introduced taxes to remove the incentives for speculative investments in realestate. The changes mostly seemed to have worked, but it came at a high cost for the speculators.

A big component of this is that building codes aren’t really enforced for the construction of single-family housing in Japan. Even if you wanted to buy a used home, you run the risk that shoddy construction could put you at serious danger in the event of the country’s not-so-infrequent natural disasters. This is one reason why most people tear down and rebuild.

A good percentage of new homes I've seen in the last 30 years here in America are barely a step above that in quality. Most of them aren't outright dangerous, but they certainly aren't top quality.

Houses in the U.S. are largely built by profit maximizing developers who know that the typical American homebuyer cares more about total square footage than essentially anything else about the house. Is it big? Does it have a nice facade? I'll take it! Houses are typically built exactly "to code", rarely above it.

Isn't that kinda the point of a uniform code of building? At least here the county code requires larger studs and windload due to the weather we get.

I've worked on homes built in the 90's with stupid stuff like flashing missing around the doors and windows. The ensuing water damage is not pretty. Pretty easy to sneak that past an inspector.

There's an argument to be made that if nearly all building just barely meet the legal requirements, then the legal requirements are too steep because we haven't found the bottom.

Compare with NHTSA car safety ratings. Many cars get 4 or 5 stars, but you can still build/buy a car that would be less safe.

Yeah but you also can't build a car without seatbelts/airbags/backup cameras.

Yeah, walking into an average home built 35 years ago and the average one built 5 years ago, the difference is huge. Older ones definitely feel like they'll just pancake during a moderately large earthquake. They also completely lack insulation and many don't even have double pane windows. Nobody wants to buy houses like that in this day and age.

So people rebuild houses just in case for a not-so-frequent natural disaster? Or are there other reasons too?

Yeah there are other reasons, from related insurance concerns to cultural/quasi-spiritual beliefs that old homes acquire the “fortunes” of their previous owners. Also, said lack of building code enforcement, makes new home construction cheaper, faster, and more plentiful.

But there are also A LOT of earthquakes, typhoons, and floods in Japan, so it’s not exactly a minor concern either, especially when houses are typically seen as something you buy for life.

On the flip side. I have a friend she is native Japanese, divorced, clerical worker with low income. She got a used house in the suburbs of a small city. (30 minute bus/walk commute) She basically only paid for the price of the land. The house itself is in good shape and the only maintenance issues have been the ones you'd expect from a twenty year old house. Heater replacement, a kitchen vent. I've been inside the house and I see no evidence of shoddy construction. (not that I'm trained to spot it).

My point the housing market like it is makes it much less likely for people to become homeless. Japan's homeless numbers reflect this.

You are loosing the investment potential of the building on your property. There is nothing to stop you buying an old house (that is essentially valued at nothing) on a property and living in it. That will essentially maintain the equity you put in.

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