How Tokyo avoided the affordable housing crisis
konichivalue.com
konichivalue.com
- Tech pays disproportionately high in Tokyo so yes, it's "affordable" for us.
- If you come from anglo-saxon countries mainly (USA, London, AUS/NZ), Tokyo will seem dirt cheap.
- If you come from cheaper countries like me from Spain, Tokyo will seem alright, not too cheap not too expensive.
- Definitely doesn't seem "one of the most expensive cities in the world" as many people say, and I think that's the key to understand the whole article/author point of view.
The issue is IMHO that Japan, Spain and USA are used to very different standards of living in many regards, so it's just impossible for a straight comparison (the markets I know best). For example, in Japan people are used to 1h+ daily train commute, readers here from the USA are likely used to 1h+ daily car commute, and I'm used to walk across my home city in ~30 min. This makes me prioritize a walking neighborhood near my job (I can walk there in ~40 min in Tokyo), but that means I had to choose either crazy expensive or tiny appt.
Same for house sizes, Japan is a lot smaller but smart about it, (like in boats where every small crevice is taken advantage of), while in Spain it's usual to have a guest/secondary room, and in the USA within that driving time people might even have a whole "laundry room".
Another bit of cultural difference is seen in "America’s largest city, New York started construction on just under 30,000 new housing units in 2020 while Tokyo started constructing 130,000 units."; while it's probably true that the USA needs to build more, Japan sins on the opposite end of the spectrum where they build very cheap and demolish it after 20-40 years. I'd like to see a rate of "housing built vs demolished" to present these numbers as a net positive difference.
There's a good reason for that: in Japanese experience, older houses = more likely to collapse in an earthquake. Who wants to take that risk? Also, building "very cheap" is part of why housing is more affordable here; instead of prioritizing "character", they prioritize efficiency, safety, and affordability, and striking a balance between those. So if you go looking at buildings constructed within the same timeframe, they tend to all look alike inside, using the same construction materials.
You have a point with net change being overlooked though. I have observed here that it's very common to demolish older multi-unit buildings and replace them with taller ones, so there is a net gain, but not as much as you'd think by ignoring the number of units demolished.
>The issue is IMHO that Japan, Spain and USA are used to very different standards of living in many regards, so it's just impossible for a straight comparison
This is exactly right. I find it really frustrating to try to talk about this stuff with Americans because they simply cannot comprehend a comparison based on anything besides $/square foot. So I try to put it in terms of "how much does rent cost for the average person", and some people will get it then, but not many.
>- Tech pays disproportionately high in Tokyo so yes, it's "affordable" for us.
It does pay higher than typical local salaries, but compared to American salaries for similar jobs it's a fraction as much (esp. with the current lousy exchange rate), so it's not as "affordable" as it might seem to someone making an American tech salary. Still quite comfortable in local terms though.
If you are even slightly conscious/purposeful about this, you can do a thousand things with the money you save NOT rebuilding a house in Japan to lenghten your life that are a lot more effective.
About cost, I don't know enough about architecture to tell about earthquakes, but in non-earthquake areas a house built costing 2x as another one (everything else being equal and focusing the extra cost on quality/durability) will go from lasting X years to basically forever, or at least a much much larger timeframe than 2X.
Assuming earthquake are similar (I suspect not), cost should definitely be worse if you have to rebuild every 20-40 years than if multiple generations lived in the same house!
IMHO in Spain (low geo mobility, long-time housing duration) that's a big deal and basically why, while it is a "salary poor" country, people have relatively good lives. That's why most people also go somewhere else for summer holidays, either a family second house, a friends house, etc.
We would all like to live in Venice of course, but when the population of your city is growing fast, this kind of thing is a big problem.
"Only" 600 people died because buildings were constructed to withstand earthquakes. Contrast that with other countries where buildings are not well-constructed, and an earthquake kills tens of thousands.
According to you, buildings should NOT be made to withstand earthquakes, and should instead be preserved because they're old, and then when the whole city collapses due to an earthquake, killing hundreds of thousands, you'll just wring your hands about the poor old buildings lost.
The fact is that engineering gets better over time as architects and structural engineers learn better how to design buildings to handle earthquakes while also being attractive, comfortable, energy-efficient, etc. You can't do that with old buildings; retrofitting an old building to improve its performance in these ways (even if it's possible) will always be MUCH more expensive than just tearing down the building and erecting a new one, just like trying to retrofit a 60s Mustang to perform like a new one will cost millions. There's a reason housing costs in Japan aren't high compared to, e.g. America, and keeping unsafe, ancient buildings around long past their good-by date isn't one of them.
"The median home sale price in New York City as of Quarter 2 was $767K, a 0% change year-over-year. A total of 11489 homes traded, a mere -1% difference compared to the same month last year. In Quarter 2, the median price per square foot was $979, a 6% YoY change. The median home sale price in Manhattan was $1.2M."
https://www.propertyshark.com/mason/market-trends/residentia...
"A survey conducted by Recruit of people who bought newly constructed detached houses in the Tokyo metropolitan area in 2021 found that the average purchase price was ¥43.3 million, the highest level since the survey began in 2014."
https://www.nippon.com/en/japan-data/h01311/#:~:text=A%20sur....
"In September 2020, the average listing price for a newly constructed detached wooden house in Tokyo of between 100-sqm and 300-sqm (1,076 sqft and 3,229 sqft) was:
Greater Tokyo Area: ¥36,850,000 ($354,000) Tokyo (23 Wards + Western Suburbs): ¥42,880,000 ($412,000) Tokyo 23 Wards: ¥59,410,000 ($570,000) Tokyo western suburbs: ¥40,110,000 ($385,000)"
https://resources.realestate.co.jp/news/how-much-does-it-cos...
First off, I’m willing to bet that the size of the Tokyo home is half or less compared to the New York option.
There are “cheap homes” in Tokyo. They are effectively unlivable by modern standards, and when a Japanese person buys one, they do so to tear it down and build something new.
If you do this, all of that is money wasted. The full value of your home will depreciate after 22 years. It only makes sense to buy if you never plan on selling. Or leaving.
"The average price of a newly constructed house in the Tokyo area was ¥43.3 million. In central Tokyo, it was ¥60.6 million."
https://www.athome.co.jp/kodate/1013825667/?DOWN=1&BKLISTID=...
The lot is 100 sqm (1000 sqft) the home is about the same, over two stories. Each bedroom is roughly half of what you would expect in an American home.
The kitchen has effectively zero counter space. This is quite common in Japanese construction.
For 60M, you’re going to end up at something like 3/4 of that.
Without checking, I’m willing to bet that standalone houses in the New York area are larger for the money.
Do keep in mind that Japanese homes are designed to last precisely 22 years. So, after 22 years, each of these homes will be worth nothing more than the land they sit on.
This is myth believed for unknown reason. Let's see many people sign up 35yr house loan.
Why should a house be an appreciating asset? With reference to current US building standards which are NOT based on long-term structural integrity.
A car depreciates much faster than 22 years, yet that doesn't seem a waste. What is the depreciation rate on your laptop?
Your claim of "bullshit" only holds if you assume current US cultural norms are the one true way.
The value goes to zero. By law.
A 22 year old used car has more value than a house of the same age in Japan.
What happens if you get a job offer somewhere else? Tough shit, you’re gonna eat the cost of however much depreciation has happened on your house.
IMHO a very peculiar take on the matter, it is the first time that I read that Tokyio has affordable housing (or maybe it has if compared to New York, or London, but these are - as I see it - outliers when it comes to prices).
In any case attributing the difference entirely to the zoning laws seems to me baseless and definitely an oversimplification.
Generally speaking zoning laws can make a substantial difference in house prices where they are simple AND there is land available, but where very little land is available?
The amount of land is irrelevant. Go back and look at the article, in particular the picture of the NYC zoning map. Only certain portions of the total land is actually usable as housing. In Tokyo, this just isn't the case: almost all of it is. You can't tear down an old warehouse in NYC and build a condo tower there, at least not without a lot of political difficulty. In Tokyo, it's pretty trivial.
It is clear that more flexible zoning laws allows for easier re-use, if there are abandoned old warehouses and other limitations (height of buildings) do not exist, then this may contribute to more availability and lower prices, but you need many, many converted old warehouses to make a dent in availability, and not necessarily large availability drives prices down.
Differences in zoning laws have a relatively high impact in places where there is plenty of available, unused, land.
without realizing that this is a historical anomaly.
https://www.ceicdata.com/en/indicator/japan/real-residential...
> The current metro area population of Tokyo in 2022 is 37,274,000, a 0.18% decline from 2021. [1]
> The current metro area population of New York City in 2022 is 18,867,000, a 0.23% increase from 2021. [2]
For the past 4 years this hasn't been true, year over year.
[1] https://www.macrotrends.net/cities/21671/tokyo/population [2] https://www.macrotrends.net/cities/23083/new-york-city/popul...
https://japanpropertycentral.com/2022/08/central-tokyos-popu...
For Tokyo, I think discussions about population change should be focused on the 23 central wards. Here's a more up-to-date source: https://www.toukei.metro.tokyo.lg.jp/jsuikei/js-index.htm (it seems to be 14mil today vs 9mil in 2016)
From an European POV, you Americans already push stocks and individual retirement savings like they are a golden calf with your 401k plans and the slaughter of actual pension systems.
As for home ownership: it certainly is better in retirement if you own your paid-off home and only have to foot property tax, utilities and a savings fund for renovation out of your retirement accounts or pension payments.
What are you talking about? Government-run pension systems, or company-run ones? The government-run one is called "Social Security" and it hasn't gone anywhere, and certainly hasn't been "slaughtered". It hasn't changed in ages really; the problem is there's fewer contributors and more recipients now due to population aging, so when the surplus runs out in 15 years, it'll be restricted to only incoming funds, so recipients will receive less.
Company-run pensions are indeed dead in America, for good reason, being replaced by 401k plans. Why would you want your retirement security tied to your former employer? What happens when the company mismanages the pension, or the company fails? This has happened many times here, with older people losing everything except the social security which isn't that much. That's why they moved to the 401k system, so retirement funds are put into the hands of a better-regulated 3rd party financial firm to be invested in securities.
I don't see the problem here. I have my issues with many things in America, but this is one thing they did right. It could be better: some 401k providers are much better than others, for instance (some have poor securities selections available, some have high fees, etc.), but overall it's much better than the old days of having a company pension.
What happens when the economy tanks? The fact that so many Americans have tied their post-work existence to "stonks only go up" is a damn perverse incentive for the US government - as it now has to think "what will the stock markets do if we introduce political measure XYZ" every time. Strong environment regulations for oil and power companies? Regulation for social networks? Is this a good idea when a lot of your people have a sizable exposure to these in their retirement accounts?
Meanwhile, here in Europe, pensions tend to be financed by the pension contributions of the current working generation. It's not perfect, far from it, but at least our pensioners don't have to fear random shit wiping out a third of their pension funds (assuming a 100% investment into S&P 500 [1]). We don't tie neither our pensions nor our healthcare to our employer (or even to being employed).
[1] https://www.statista.com/statistics/1175227/s-and-p-500-majo...
The default of those laws has been to deny permissions.
Yes, zoning is local. But read the history to find out where it started and how it was decided that this was a local power.
https://economics21.org/history-zoning-america-flexible-hous...
Also note that this government regulation hinders the power of the free market to meet the population's housing needs.
Japan takes a different approach to zoning, thus allowing market forces to better serve the people.
> the population of Tokyo is still growing!
It was, but now it's not: https://www.nippon.com/en/japan-data/h01310/
"The price of new apartments in Tokyo toppled a 30-year-old record in 2021 as rising demand from dual-income households and increasing construction costs boosted the Japanese capital’s once-moribund housing market."
https://www.bloomberg.com/news/articles/2022-01-25/apartment...
"Tokyo is one of the most expensive cities in the world, so there is no doubt that Tokyo house prices are also very costly."
https://questionjapan.com/blog/location-guides/tokyo-house-p...
Try getting a nice, safe, comfortable, and modern apartment in NYC on USD$1000/month; I don't think it's possible. In Tokyo, it's common.
Also, Tokyo being one of the most expensive cities to live in is a myth, so any source that makes that claim is, to me, immediately disqualified as having truthful information. Going out to eat here costs a fraction of what it does almost anywhere in the US.
Sure if you are a kitchen appliances hoarder, you need a 80m2 kitchen already so there is very little room for anything else. If you know how to cook and use your hands everything is much simpler.
Public space like parks and the walkability of the neighborhood are very important factor for comfortable living in small space. Both of which Japan do very well.
Hiroshima was much more pleasant. There are walking paths, greenery, and even restaurants along the river. Kyoto was closer to Hiroshima, with areas with wide set back streets, not to mention forests.
There are a few parks in Tokyo but I had to travel to them but also pay to enter them! The unspoken trade off people who advocate for dense urban development fail to mention is the elimination of private green spaces for most people.
Local laws may increase these mimimum sizes, the tendency is to set the minimum to around 40-45 sqm in many places.
It's just hard to imagine, coming from Australia.
I love the idea of a living space that's optimised and cozy. I don't need an entire room for some machines for laundry, I don't need two rooms for bed and for computer, and heck, I hardly need walls at all. Not many studios here either, sadly.
One thing I'll note: Many Australians talk ill of apartment quality here. Both I've lived in had double glazed windows, well insulated walls, and modern and reasonable-quality fittings. Maybe I've rolled high a couple of times? But signs currently point to no, and I think the "Australian apartments are crappy dogboxes" is more of a media talking point than reflective of reality
The whole Tokyo is so cheap meme really has to die. It’s just a bunch of rich foreigners enjoying purchasing power differences. Average Tokyo people on average Tokyo wages certainly do not think it is so cheap. Go watch Asian boss on YouTube.
Not all foreigners who consider the grass greener in Tokyo are American or have a purchasing power advantage. Some just come from an area where housing affordability makes Tokyo look good.
Even if they're working a job making less than the median Tokyo salary, they'll likely still rate Tokyo's housing affordability as much better than when they were working that job in Vancouver, earning below-median Vancouver salary.
And, reciprocally, what would you tell a Tokyoite who is considering a move to Vancouver? The ones I met all were shocked by the cost of rent, and really struggled, especially the ones working service jobs -- like hotel staff or restaurant server -- who could get by much more comfortably in Tokyo with those jobs. They could only afford crowded shared rooms in Vancouver, and ate into their savings to do so. But even the tech workers from Japan found Vancouver less appealing.
Most places <$1k USD/month seem to be 20-25 sq meters
[１] https://japanpropertycentral.com/real-estate-faq/home-loan-t...
If you want to have a family you basically can't live in a small cramped apartment in the city. That's why families with kids move out and people commute like crazy.
If you like to commute for 1.5-3 hours a day its affordable.