Appraisal News and Business Tips

Japan's disposable homes

During my morning walks, I listen to podcasts. One of my favorites is Freakonomics Radio (Yes, the same guys that wrote the book)
I recently listed to a podcast where they analyzed Japan’s very unusual home sale market. They consider many homes to last about 20 years (economic life) and then they are demolished and new homes built.
A few excerpts from the summary of the podcast:
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.
In the podcast, we look into several factors that conspire to produce this strange scenario. They include: economics, culture, World War II, and seismic activity.
Richard Koo, chief economist at the Nomura Research Institute, has argued in a paper called “Obstacles to Affluence: Thoughts on Japanese Housing” that whatever the rationale behind the disposable-home situation, the outcome isn’t desirable…
My comment: Fascinating and worth listening to!! Very interesting for appraisers, especially.

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2 Comments
  1. Distressed homes already make up a large chunk of the local real ettsae market. Nearly half of the homes sold in the Bay Area between September 2009 and this past February were short sales or foreclosures.a0 And the market share of Bay Area short sales rose from 15.65 percent in September 2009 to 18.64 percent this past February.a0 And, we still see some softening of prices in the $1 million+ price range in our region which may cr

  2. Hi Anne, My immediate reaction was that to demolish a home after about 30 years of use is horrible. We should be building homes to last and reuse and refurbish what we have built with our natural resources. Shame on us for taking so much from the planet, using and throwing away. ( My house was built in 1870 and my family has lived in the home for 30 years.)

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