1. yes you might get a house at this price but it's either 1-2 hours out of the city center (which is fine, just saying Tokyo is large.) Or alternatively it's in bad neighborhoods.
(bad is relative if you are from the US)
there are nice ones in the list. I am just saying that this is the eastern country side of Tokyo (check the map) when the title probably makes everyone think something different.
Not sure what's wrong with that? That looks pretty amazing actually. I live in a unit that looks similar to that near downtown Chicago. My unit is north facing, and even so, there's more than enough sunlight.
The title says "house" for a "family", and the pictured structure is not normally what people think when they hear that, being significantly smaller than even a typical townhouse. In particular, a "house" suggests something larger than a small apartment.
Obviously there's nothing wrong with an apartment or microhouse, but it makes the quoted rent less impressive.
Well I guess that’s true from a North American perspective. I’ve lived in several countries, and from my perspective, in Asia and much of Europe, that structure seems like it would be considered a passable family home in an urban area. Most urban folks have a different relationship with space — smaller spaces are ok if one is close to transit and city amenities.
But the whole point of the headline is to try and convince the reader that Tokyo housing prices are low relative to the reader's expectation. If the small housing price example is congruent with the size of the example house, there's no story.
I'd contend it's fair to adjust for the country's typical expectations. Just like you couldn't simply expect the same size of house in Hong Kong as you might in Europe.
Not normal for who? Because in Tokyo, the house in the pic is quite normal. If I look just from my rooftop, I can probably count 20 houses of a similar design.
Also, keep in mind the height of the house. People tend to build up here rather than wide -- at least in family areas in central Tokyo. My current house, while slender is almost obscenely tall. It's four floors including the rooftop deck. In comparison, my childhood house back in midwestern America, seems much less spacious.
I live in a pretty well to do family oriented neighborhood in central Tokyo, and this is a very common design. Although I’m not sure about mortgages, but rents definitely ain’t just $850. But as the parent post said, it’s all about location. Prices nosedive once you leave the center of Tokyo or are off the main train lines.
It’s not so much the exact number as the approximate order of magnitude.
For anyone living in one of the equivalent world cities (say, NyC, London, Shanghai, Paris, San Fran- you may quibble with me in the exact list but you know what I mean) these prices aren’t even remotely plausible.
(The one possible exception might be Berlin but that info could be dated)
This is the sort of thing that markets solve really well. If you want a dwelling unit with those properties, pay for it. If they're less important to you than cost, don't. If one is $300,000 and the other $600,000, it's very reasonable to choose affordability and go to a park.
From my observational experience, and limited study on the issue, markets don't seem to be solving this optimally, at least in Melbourne, Australia.
Overall, the market for apartments seems to be supply constrained. The main factors:
1. Government approval is required to build large apartment buildings. In general, this seems to lag behind demand.
2. Large buildings take a long time to build
3. There have been a number of years of high immigration, especially in and around the CBD.
All of these factors combine to cause high prices. In a high price environment, many residents are stretched for cash. They essentially have to pick the lowest price apartment available. It's not uncommon to have multiple people sharing a room in order to decrease costs. This creates a high price floor. Mid range apartments don't tend to be much more expensive, simply because many residents are already super stretched financially and unable to afford the extra marginal cost.
As a property developer in a high floor, low marginal payoff environment your financial incentive is now to build as many low cost apartments as possible.
>> The majority of Victoria’s newest apartments are so small they would be considered unliveable in Sydney…More than three-quarters of new one-bedroom apartments built across the state are 50 square metres or less, which means they probably would have been illegal in Sydney, London and Adelaide. [1]
Making these apartments meet a reasonable minimum standard could only be less than 5% of the total cost [1]. To achieve this governments have tried to intervene by increasing minimum standards [2].
What concerns me the most is the longer term impacts. When demand drops off (as covid is pointing to), you have a massive supply of low quality apartments. Is the end result of this many vacancies and people living in shoe boxes when they could've been somewhere nicer?
There are a few long bows there, but as someone who lives in a relatively sunny but not quite sunny enough apartment that is my take.
It's an interesting question. To rephrase, I think the market is undersupplied with new construction skewed towards lower quality apartments. This would suggest that high quality apartments would be extra valuable.
I have less experience in the high end of the market, as it's firmly out of my price range. Perhaps that alone is the answer? If while earning ~2x median pay, I don't consider staying somewhere more livable it would suggest prohibitively high prices. I'm unsure if the price is dictated more by the aforementioned undersupply or the higher quality. It probably reveals something about inequality in society.
I can't be certain the motivations of the developers choosing to build smaller apartments, the reasons I alluded to in the parent comment were an attempt at an educated guess. There is however an obvious ground truth that apartment sizes are shrinking (47m2 2014/44m2 2015 for 1 bedroom -10% in one year!) [1]
That really isn't a problem. So long as you can afford something where your basic needs are met: four walls, clean, safe, sturdy, etc, nobody's entitled to waterfront views. The idea is you create value through your work and utilize the proceeds to upgrade your residence, if that's what you value.
I agree that not everyone's entitled to waterfront views, but I think that in a functioning society everyone would be able to own a decent house (e.g. one that gets sunlight), within a reasonable commute of their work, in desirable part of the country (e.g. in a cosmopolitan city).
The difficulty that I see is that housing prices in America are so high that it's unrealistic for moth people to create enough value to purchase a residence at even that basic level of quality.
I think, unfortunately, the definition of decent in this case is viewed as luxury. Most specifically the concept that everyone should be able to own a house within a reasonable commute of work in a desirable location. This cannot happen while also respecting the idea of properties as investments, the wealthy wanting to be able to purchase disproportionately large places in multiple desirable locations, and the idea that so many people may desire to live in a city that the city cannot possibly take them all.
>This cannot happen while also respecting the idea of properties as investments, the wealthy wanting to be able to purchase disproportionately large places in multiple desirable locations
I'm not convinced that these are values worth respecting.
> I think, unfortunately, the definition of decent in this case is viewed as luxury. Most specifically the concept that everyone should be able to own a house within a reasonable commute of work in a desirable location.
A house or a place to live? There's not enough physical land adjacent to places of business for each person who wants one to own a single-family home. They're an awfully inefficient use of space -- see the entire western half of San Francisco.
> This cannot happen while also respecting the idea of properties as investments...
Property can't be affordable and a good investment. Those two are mutually exclusive. An investment goes up relative to inflation. Affordability by definition goes down relative to inflation. You can't have something that goes up as it goes down.
> ...the wealthy wanting to be able to purchase disproportionately large places in multiple desirable locations...
You can, if you do something along the lines of what Singapore does with the HDB. Some 90% of Singaporeans live in government homes built by the HDB, and the remaining 10% is available to the wealthy to play.
> ...and the idea that so many people may desire to live in a city that the city cannot possibly take them all.
They city can absolutely take them all if you allow building up. There's no excuse for down-town San Francisco north of market limiting buildings to 6 stories when downtown Hong Kong has 118 story buildings.
> own a decent house (e.g. one that gets sunlight)
I'm not sure this is that important a criterion for most people. Pre-lockdown, I'd leave the house before the sun came up, and got home barely in time to catch the sunset. If I wanted sunlight, I could walk a block in either direction.
I actually have a preference for living in shadier (as in shade, not crime) parts of town, especially neighborhoods with tree-lined streets/boulevards.
> I agree that not everyone's entitled to waterfront views, but I think that in a functioning society everyone would be able to own a decent house (e.g. one that gets sunlight), within a reasonable commute of their work, in desirable part of the country (e.g. in a cosmopolitan city).
Out of curiosity, what is your reasoning behind this belief?
I see the role of society to be to provide for its member's needs[1]. While I don't think "needs" means that everyone gets a Ferrari and a Yacht, I do think it goes beyond just what one requires to be alive. In particular, due to America's size and diversity, having flexibility in where one lives is an important part of being able to choose one's lifestyle.[2]
[1] At least until we arrive at some sort of Star Trek level of technology, no society is going to do this perfectly, so when I say "functioning society" I mean one that more or less provides for the vast majority of its citizens and provides some sort of safety net/second chance for people who do fall through the cracks.
[2] This is much more "wishy washy" and hard to quantify, but I'd say that in a functioning society everyone would be able to, in a general sense, live the sort of life that they want while providing for themselves and their family. I mean this in broad strokes such as wanting to live in a cosmopolitan city/near the beach/near mountains or wanting to be able to seriously practice art/music/sports (although not necessarily as one's day job).
I don't know if it would be possible to provide to everyone in society who wants it, but a path towards at least making it more available might look like:
Invest in public transportation (and potentially restrict private transportation in city centers) so that we can expand how far out someone can live and still have a reasonable commute.
Where appropriate, allow people to work from home so that commute is less of an issue.
Build more and in some cases higher density affordable housing so that more people are able to live in desirable areas.
Invest in infrastructure (both practical infrastructure such as high speed internet and "aesthetic" infrastructure such as parks and public works of art) in order to make more places desirable.
I definitely agree, I just chose cosmopolitan cities because they are both one of the most commonly preferred places to live right now and one of the most expensive.
Often that's not a realistic option due to factors such as where family lives, access to minority cultural/religious institutions, access to good jobs, or access to cultural opportunities.
My point is, what is society supposed to do about it? I can't afford to live three towns over where it's nicer. I'd need about another $3K a month. Could you spot me on that, permanently?
The big issues that consistently affects real-estate around Tokyo is proximity to a station and the age of the building. The basic rule is that a condominium must be within 10 minutes walk from a station, and a free standing house up to 15 minutes walk. A house around 30 years old is worthless, and a house younger will be some fraction of its original purchase price. There are exceptions but this is a pretty good rule of thumb. Land is generally the only thing that appreciates in value and only if its in a desirable location. As a point of reference, we live in an 90m^2 home 45min from Tokyo station and it was less then the above price.
Because many of them were built cheaply to begin with and develop problems over the decades. They weren't built for long-term living, and in a sense it was the right move since Japan was developing rapidly up till the end of the '80s. (Well-built exceptions probably exist, of course.) And then there's increased earthquake/disaster risk with poorer construction.
It's something I wondered about too until I looked at descriptions and photos of >30-year-old houses on real estate sites.
I think that's more perception then reality. I live in a 30 year old house and it could easily last 100 years if properly maintained, but there is little incentive to improve the building because it will not improve the resale value.
>Or alternatively it's in bad neighborhoods. (bad is relative if you are from the US)
I've never been to Japan, but I imagine that a bad Japanese neighborhood is incredibly safe compared to a bad U.S. neighborhood. In a bad U.S. neighborhood one has to regularly take precautions in order to not be physically assaulted or even killed by other people.
That said, of course I'm not thinking that Japan is some paradise. What I hear/read about their justice system and their stifling conformist culture doesn't sound very good to me.
Their conformist culture is upsetting, as is the rampant institutional sexism, but a lot of the issues with their justice system are overblown. 99% conviction rates are more likely a result of cases being dropped below a high confidence threshold, not a result of kangaroo courts.
You can get a large house that gets a lot of sun and is somewhat walkable / bikeable in Compton for $350k. With 20% down and all taxes & fees & insurance included, that's close to $1700/mo. In San Bernardino, you can get stuff for $250k, which about $1200/mo. You can get trailers in Riverside for $150k, which is about $730/mo.
$300k for new construction is ludicrously cheap for most coastal California cities. I was told to budget $150-250k for permits when I considered buying land and building my own house in Santa Barbara.
Both my current and my previous house would be illegal to build today because they are too large (even though both houses comfortably fit the frontage requirements, there is an additional X square feet of livable space per Y square feet of lot; in all R-1 zones, the calculation is such that a single-story house can usually hit the dwelling-space limit, so most 2 story houses in town would be illegal to build today).
Santa Barbara is a terrible place to consider for buying/building a house. Sky high property taxes and inflated property values are begging the local economy to dry out due to rental prices (The Bay is cheaper if you compare similar apartments with similar interior/exterior). The city can't expand because of geology, and it refuses to build up to preserve the "historical view of the Riviera". Sure it's a pretty city, but it won't mean much if it's dead.
Buying is way cheaper in Santa Barbara than the bay area like half to two-thirds depending on where you compare to. The only thing even close to Santa Barbara prices for sale when I checked a year ago were "unique" properties in East Palo Alto. Rents are pretty insane here though. It's a total flip from when I moved here (I was paying $50/month more in rent than a friend who got a job in the Indianapolis. I lived walking distance from downtown).
There are plenty of 2br apartments for ~$2.5k on the east side of the bay (San Leandro, Richmond, etc.), and you will have better job opportunities as well.
OP just pulled a part of the Los Angeles area out of their ass they figured was cheap because a rap song told them black lived there. $350k isn’t getting you something decent in any part of the city nor surrounding area.
Given your name, I guess you live in Japan, so I'll just give my opinion for others who have never lived here. I also think the title is misleading, though I wouldn't express it so dramatically.
One thing to consider is that Tokyo is a prefecture, not a city. There are rural areas of Tokyo (like really rural), though most of it is very suburban. Anybody who has lived in the suburbs in western countries would probably be fairly comfortable in most parts of Tokyo prefecture.
It is true that in quite a few areas of Tokyo it takes a long time to get to central Tokyo. 2 hours is at the extreme, though. I live in very rural Shizuoka prefecture and I can get to Tokyo station in 2 hours if I time the bus and shinkansen perfectly. If you are on the train line, most places are no more than an hour away. It's pretty comparable to living in satellite cities in London, but the train is much better :-)
If you are not on the train line, though, it can take quite a long time. Roads in Japan are very slow, especially in rural areas. It's not unusual for it to take me over an hour to drive 30 km or so if I need to go through several towns. So you definitely can find houses in Tokyo that will be 2 hours away from the city center, but I don't think anyone working in central Tokyo would buy those houses.
I honestly don't think the example picture is representative of houses you'll find in Tokyo prefecture. They definitely exist in areas that are desirable, though. I think saying that you're probably looking at either a 1 hour commute by train or your are going to get a house jammed in wherever it will fit is correct. But it's not both at the same time.
I don't often go to Tokyo, but I occasionally go to surrounding areas. Probably if I was looking at houses for commuting to central Tokyo, I would probably look at places in Kanagawa, Chiba and Saitama as well as Tokyo. There is actually quite a lot of choice.
The video linked in the article is well worth watching (as is anything from "Life Where I'm From" if you are interested in Japan) and is extremely balanced IMHO. Compared to other big city centers around the world, Tokyo and the surrounding area is quite affordable. Compared to Silicon Valley it's almost comically so, but Silicon Valley is really right at the other extreme.
And I am willing to bet that picture was taken somewhere like Shinagawa or Meguro, maybe Setagaya. Where houses like that start at a price rather double of what's stated in the article, potentially triple.
Although do note that those factors don't fully cover the differential. Even in Hudson County or Contra Costa County, you're gonna have a hard time finding a 3 bedroom for $300k.
Hm, it could use a bit of work but this 4 bed 3 bath, 2400 sq ft home in Hudson is $249 [1]. It's a little ways from the train station though - a 10 minute drive. There's regular service from there to Penn Station, which takes about 2 hours.
> The first thing to note is that in Japan, housing isn’t an investment. It’s a place to live.
Fixing this can be a major obstacle in countries with inadequate pension systems. In countries where dependency on rising property values is the chief or sole form of retirement planing for vast numbers of people, fixing a broken housing market becomes dependent on fixing the retirement system.
And when land values are consistently propped up by government to a greater degree than other investments, it moves people even more into land speculation as their retirement investment because of its artificial safety.
> 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.
> 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.
"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."
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."
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.
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, 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.
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.
This article is citing another article from the same source [1]
"The typical Tokyo metro area starter home would be an apartment (around 750 square feet) or detached wooden house (around 970 square feet) located in the outer suburbs. According to Zoe Ward of Japan Property Central, the average Tokyo office worker has about a one-hour commute by train each morning."
So part of the answer is that homes are tiny by American standards, and it's not actually in Tokyo proper.
A lot of the people with hour-long commutes are not going long distances by American standards. They live in "Tokyo proper" (which is really more of a prefecture than a city) or the neighboring cities.
Even square footage isn't a perfect metric for cross-national comparison. For example, furniture in Japan (at places like Nitori) is often designed for smaller spaces. When I lived there, a $300 couch fit[1] perfectly in my living room, while it would've looked hilariously undersized in any North American house. I was more comfortable in that apartment, approx 480 sqft, than I was in a 1000 sqft apartment I had in North America
The cultural differences make this comparison less meaningful than you’d expect. In Japan you absolutely never have friends over to your house or apartment. Everyone meets at bars or restaurants. Similar to nyc, many apartments in Tokyo are a few hundred square feet and literally only serve as a place to sleep and shower. That means houses aren’t such a major thing and so the Japanese invest way less time and energy (and place less importance on) their homes.
My parents lived in japan and I have a few friends there. I spoke with a friend who works in graphic design on the outskirts of Tokyo who doesn’t even own a fridge - all his meals are eaten outside of his home.
> The cultural differences make this comparison less meaningful than you’d expect
If these cultural differences are so strong, then surely a market that allows new construction in the U.S. will tend toward creating housing that meets those needs. If it doesn't, it's probably because people place more value on other things (e.g. proximity, price, etc).
The fact is that the market doesn't even get a chance to work itself out in the U.S. because cities encode a particular set of living preferences in law.
> absolutely never have friends over to your house or apartment
Absolute statements like that are just clearly not true. I've been to Japanese friends' apartments, even visited friends' family barbecue or wine tasting night.
I agree. When I lived in Japan, I was invited to (local) friends' places often, including for a couple of kotatsu sleepover parties. It was probably more frequent than being invited to a friend's place in Vancouver.
Probably because most of my friends in Vancouver live in sharehouses or basement suites where they aren't allowed to have guests by their landlord, while my friends in Japan had small but respectable spaces that they had much more permissive ownership of.
The article has almost no content, but one of the three facts it provides is that Tokyo has 3-bedroom houses on offer for anyone who wants one, for $300K and 1% annual interest. It's not about 300sqft apartments.
You can do the exact same thing in nearly every part of the USA except Blue cities where regulation has moved home ownership out of the poor's reach. For example, California, new construction requires an electric vehicle outlet in garages. If you're poor, you have much better things to be spending $1500 than some charger outlet they will literally _never use_. Instead, regulations on how people want to live their lives and shelter themselves cement a cycle of poverty into these areas.
Extreme political bias aside, you need to check your facts. This article from 2014 estimates the cost for the required 40/80A breaker/conduit at a whopping $50. This is in contrast to the higher cost of adding such capability later.
An EV charger only costs about $400. Add $100 or so, if you don't already have a 240v line there pre-construction.
This seems like a totally fair thing for regulation to require, considering the majority of Californian homes are going to be hanging around for 40+ years or more.
"But zoning may be the real winner here. Japan’s zoning laws are national—so no local weirdness hampering construction and driving up prices. The system has 12 zones progressing from residential to commercial and industrial. Any buildings allowed in zone 1 are also allowed in the following zones. Basically: Housing can be built almost anywhere, even on extremely skinny or odd-sized parcels of land. This increases the amount of usable residential space and helps builders continue to meet demand, keeping housing costs under control. "
Fighting for something like this here will be one of the fights of the younger generations, otherwise they will be permanently locked out in any city with jobs. (There is plenty of housing where there are no jobs.)
Local NIMBY zoning must die. Its basically a cartel: collusion to restrict supply and drive prices artificially high.
As someone who's invested pretty heavily in real estate over the last few years (Seattle) I sometimes ponder if we are all eventually destined to a fate similar to that of Japan's. It seems to me that the US is only a superpower because we were geographically fortunate to not share contiguous borders with Europe post WWII and we've taken that for granted. Policy makers in the US don't have a long enough horizon to adequately plan for the future; and birthrates are projected to fall—it's hard to say how much, but, eventually, even below replacement rates (?).
As of late I have started to question the long-term prospect of indefinite economic growth, and what the implications of challenging the status-quo here are. I would be interested as to what people's perspectives are around the likelihood of advanced nations inevitably sharing a fate similar to Japan's.
An average family in Tokyo does not live in a detached house so the whole argument is false. About 27% of the units are detached houses and the ratio is decreasing a bit.
Plus Tokyo is almost 100km wide. That's a huge area and of course there are places where housing is dirt cheap because people are fleeing away.
I think the more interesting point is the interest rate. 1% @ 35 years is exceptionally low.
In the US, say at a 3.5% and 30 year loan, your monthly payment would be closer to $1,350. Add property taxes and insurance, and you are probably closer to $1,500.
That said, Seattle has a grass roots effort right now to try and get social housing on the ballot for November. There are folks here fighting for housing as a place to live, not as an investment.
i’m of the opinion that weiner’s various housing bills, while lovely and worth passage in their own right, didn’t go far enough to break this construction gridlock in california.
In the 1980s, Japan had an enormous economic bubble. (This was the period when MITI, the Ministry of International Trade and Industry, was the ultimate Platonic ideal of how to run a country's economy and the Japanese Fifth Generation computing project was going to eliminate "programming" as a job category.) This bubble burst in 1990-1991. It was bad.
"GDP fell from $5.33 trillion to $4.36 trillion in nominal terms, real wages fell around 5%,... Many Japanese companies replaced a large part of their workforce with temporary workers, who had little job security and fewer benefits. As of 2009, these non-traditional employees made up more than a third of the labor force. For the wider Japanese workforce, wages have stagnated. From their peak in 1997, real wages have since fallen around 13%..[as of 2013]."
"Japan's annual land prices averaged nationwide have finally risen since the asset bubble collapse, though only mildly at 0.1%, a process that has taken 26 years to show up statistically. [undated]
"By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak,...
"The Nikkei 225 at the Tokyo Stock Exchange plunged from a height of 38,915 at the end of December 1989 to 14,309 at the end of August 1992. By 11 March 2003, it plunged to the post-bubble low of 7,862."
"After a long climb during the decades of Japan’s economic miracle, prices exploded in the late eighties in the frenzy of the bubble economy. Over the following decade, prices collapsed by over 80%, hitting a low in 2002. Since then however, prices have increased and we are not in the middle of a stable period of growth with a positive outlook for the future."
https://housingjapan.com/buy/history/ [I note: "Housing Japan is the leading real estate agent for international clients looking to rent, buy or invest in the Tokyo property market."]
"Tokyo’s property market has had its ups and downs. At the peak of the bubble in 1989, some condos were selling for more than 1 billion yen, and buildings with more than 30 floors started springing up.
"After the bubble, prices plummeted. In 2002, the price per tsubo was about half that of the bubble era. But easier housing loans and low interest rates helped spur demand for new condos."
This needs to be taken within the context of Japan hosting one of the largest economies in the world, despite being substantially smaller in population than countries with economies of comparable size; and also in that their real wage losses 1) pale in comparison to America's, and 2) mean that their real wages are still much higher than most of the world's.
I've heard it put that Japan's economy makes it relatively easy to live a stable middle class lifestyle, though almost impossible to accrue substantial wealth. I understand why this may seem horrifying to some, but looking at the relative affluence of the average Japanese compared to the average American, I don't see their situation as particularly dire.
> despite being substantially smaller in population than countries with economies of comparable size
Which countries would that be? There are very few with economies of comparable size. The next above Japan is nearly three times larger (China).
Besides, it's super easy to avoid that GDP / population confusion by looking at GDP per capita.
The US GDP per capita figure ($65,111) for 2019 was 59% higher than Japan ($40,846), which has been tumbling down the per capita rankings for 25 years.
For reference, in 1995 Japan's GDP per capita was $43,440, nearly the highest of any nation. The inflation adjustment on that is $74,600. So not only is Japan missing $34,000 just to break even on inflation, by contracting 6% over that time, they've actually shrank drastically in real terms.
Since 1995 US GDP per capita has increased by about 127% by contrast, exceeding inflation by about $15,000.
The other legitimate comparables: Germany is ~15% higher per capita, Britain and France are nearly the same (only slightly higher than Japan). In 1995 Japan had a GDP per capita 100% higher than Britain, now they're even. Japan ranks #19 on GDP per capita (excluding tiny nations like Luxembourg).
> and also in that their real wage losses 1) pale in comparison to America's, and 2) mean that their real wages are still much higher than most of the world's.
That's not even remotely close to being true. The US has outperformed Japan dramatically on both GDP per capita and incomes. At the end of 2019, real US wages (both median and average) were at new all-time highs, according to the Federal Reserve. The full-time median income in the US hit near $50,000 for 2019, Japan doesn't come close to that.
Japan's peak on real incomes was hit 25 years ago. They've lost about 1/3 of their real personal income since then.
Japan went from having one of the highest income figures, to struggling to remain in the top 20. US wages remain among the highest of any nation (including on disposable incomes), comparable only to countries like Sweden, Switzerland, Denmark and Norway.
Here are the average wages in the OECD. Japan ranks about 10% below the OECD average. The US is dramatically higher, ranking just behind Switzerland.
Yes, China and the US, which are both substantially larger in population. Japan also outperforms most countries that outsize it in terms of population.
>Besides, it's super easy to avoid that GDP / population confusion by looking at GDP per capita.
Not so much. A high GDP per capita is a poor measure of the average person's economic wellbeing on its own. Looking at it within the context of measures of economic inequality helps to mitigate the misconceptions that could otherwise arise.
For example, according to this Wikipedia article and its cited sources [1], Japan's rich/poor 10% average income ratio is 4.5. Compare to America, whose 18.5 is much closer to China's 21.6, and far away from France's 9.1 and Germany's 6.9.
What this means is that America's GDP per capita is substantially more affected by the high incomes of the highest earners than Japan's. In other words, the average American sees less of the benefits of that high GDP per capita than the average Japanese sees of their somewhat lower GDP per capita.
That's just income. Japan's wealth GINI indicates substantially more equality in that regard than for America. [2]
>At the end of 2019, real US wages (both median and average) were at new all-time highs, according to the Federal Reserve.
I'd like to see that citation. It's well-known that most wages for Americans, indexed against GDP, have fallen or remained flat since the 70s. The vast majority of the income gains have accumulated in the hands of the upper 2 quintiles.
This is especially troublesome for Americans as (re: the subject of this comment section) the housing situation in Japan differs greatly from America's skyrocketing housing values in major metro areas; medical insurance and care in America is substantially more expensive; and the cost and quality of education is higher and less stable, respectively, in America than in Japan. This is today, after our respective economic histories over the past few decades.
What your numbers suggest is that Japan was very wealthy for a limited period of time and is now regressing towards the mean that would be suggested by their population size and level of development. However, the character of their economic and institutional policy is making this decline smoother and more comfortable than anything we're likely to see. I continue to hold that this is preferable.
No one is arguing that Japan's economy has grown more than others. The reliance on GDP-based data (obfuscates inequality) and household income data (Japanese and American households do not send both parents to work at an equal rate) fails to capture the relative fortunes of our country's middle classes.
This is also concerning:
>Thus, use caution when comparing median incomes above $12,000 for people or $18,000 for families and households for different years
Decent family houses in Tokyo are definitely more expensive than this, but not hugely (also Kyoto surprisingly). There's some interesting things about the Japanese housing market, for example, many homes become "worthless" after the end of the mortgage -- so they depreciate and are more like buying cars.
Tokyo is also an absolutely enormous city with even more massive metro area. There's very few examples on the planet that come close. Tokyo is sometimes called "the infinite city" for good reason. This means that yes, you can pay huge money for a coffin in some areas, and little money for an entire house elsewhere in the same city. New York is kind of the same way in that respect, but is actually still smaller and less diverse.
I could write a ton more, but I think this series from "Life Where I'm From" which is pointed out in the article is a fantastic overview of housing for a nuclear family in Tokyo.
Zoning is important, but let’s also remember that single-family housing isn’t really a speculative investment vehicle in Japan like it is here.
You can either have private equity buying up foreclosed homes and house flipping tv shows or housing being used as housing that most people can afford. America chooses the former, Japan, the latter.
> You can either have private equity buying up foreclosed homes and house flipping tv shows or housing being used as housing that most people can afford. America chooses the former, Japan, the latter.
Even in very expensive markets like Silicon Valley, foreclosures are typically less than 1% of total home sales.
Homes are not a speculative investment either. Recent studies have shown investing in housing to be safer than investing in stocks, but with similar returns, over a time period stretching back to 1870: https://marginalrevolution.com/marginalrevolution/2019/03/th...
If the housing prices are growing by 6.7% year by year, and inflation is around 2%, younglings without parents money will have to be priced out and have to work ~5% harder every year which sounds fun /s ;)
I've earned a lot on owning a home, and even have friends who "earn" more per year in owning the home than their salary for a particular year.
Does america have progressive or flat land taxes? Progressive land taxes (higher % tax of land value if you own more of it) make intuitive sense for housing affordability, but I read the Wikipedia[1] and only understood that 'it depends'.
My understanding is that most jurisdictions, but certainly California and Washington state have two types of property tax levies. 'Ad valorem' aka by value, which is a percentage of assessed value (one flat rate for all parcels, not progrssive), and per parcel taxes which is just a specific dollar amount added to each separate parcel.
There's some state by state adjustments to try to benefit owner occupied properties, but the degree to which it helps varies greatly; the California owner occupied exemption saves abou $70/year in taxes (woo?). I'm not aware of progressive property taxes, but there's a lot of different jurisdictions.
1. yes you might get a house at this price but it's either 1-2 hours out of the city center (which is fine, just saying Tokyo is large.) Or alternatively it's in bad neighborhoods. (bad is relative if you are from the US)
2. your house will most likely look like this: https://www.ii-ie2.net/dat/5ba1164d.jpg
Sayonara sunlight, hello neighbor.
here are listings: https://www.homes.co.jp/smp/kodate/shinchiku/tokyo/list/
there are nice ones in the list. I am just saying that this is the eastern country side of Tokyo (check the map) when the title probably makes everyone think something different.