This page has been archived and commenting is disabled.

Japan’s Vacant And Abandoned Houses: Visions of Detroit

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

Unlike Detroit, which will run out of cash next month, Japan prints its own money, so bankruptcy in the Detroit sense is not in the cards. But they do have two things in common: depopulation and a ballooning stock of abandoned houses. For Japan, it’s an issue that even the most prodigious and reckless money-printing binge cannot resolve.

These decrepit buildings dot neighborhoods in surprising places. There was one just down the street from our apartment building near the South Korean embassy in Azabu-Juban, Tokyo. Not a cheap neighborhood. It was a diminutive wooden building, turned black with age and soot. In places there was rusted sheet-metal siding. The roof was made of rust-perforated corrugated iron. The tiny garden had morphed into a thicket of weeds.

I saw numerous such places. Sometimes they were incongruously wedged between groomed buildings. Other times, they were in rougher areas. Sometimes they were larger buildings. Further out, a neighborhood might be dotted with these pockmarks. Japan isn’t the only place with blight. But the sheer quantity of abandoned houses in Japan is stunning – and has been getting worse at an accelerating clip.

Now the government wants to do something about it. But unlike the stock market, which can be goosed by the intoxicating vapors of money-printing promises, the real economy is tougher to deal with, and housing stock, when the population is declining and shifting, is even tougher.

The Ministry of Internal Affairs and Communications surveys vacant houses every five years, splitting them into two categories: houses that could be rented, sold, or used as secondary houses; and abandoned houses. Over the fifteen years from 1993 to 2008, according to the most recent survey, total vacant houses ballooned by 72% to 7.57 million. They made up 13.1% of all houses nationwide, the highest proportion ever. Vacant but still usable houses increased by 63% to 4.88 million. And abandoned houses jumped by 91% to 2.68 million.

It’s not just in small towns suffering from depopulation, as the young migrate to urban centers. Over the decade through 2008, the number of abandoned houses in Tokyo jumped 60% to 190,000; and in Osaka 70% to 180,000! That was in 2008, before the financial crisis slammed into the housing market. Since then, the abandoned-house phenomenon has gotten worse.

Many of these structures were cobbled together during the postwar decades into the 1970s, “one-generation buildings” designed to last 30 years. While land is considered valuable, much of that value has been wrung out of it over the last 20 years. And buildings are considered an expense; they become worthless over time and have to be torn down – another expense – to be replaced by an even greater expense.

During my first foray into Japan in 1996, I stayed in a rundown apartment in a four-story building from the 1960s, in a dreary area in Ekoda, Tokyo. In 2004, I went back to check on it. It was gone. A train line had been built under the main street. The entire area had been razed. New mid-rise buildings had sprouted up. The commercial center was around the spotless station. And there was a tiny gleaming Citroën dealership. Urban renewal, the hallmark of big Japanese cities. It never stops.

But it can’t keep up with the growing fiasco of abandoned houses. There are reasons. The structure of the Japanese family has changed, with kids moving away. They might have no interest in the house. Or heirs might not have the money to maintain it. Selling a property like that in a market with a declining population and with plenty of newer houses is tough. Municipalities want owners to tear down these houses, but often they can’t find the owners. And owners are reluctant to tear them down; to continue receiving the tax benefits, they’d have to build another house on the property. Expense after expense!

It has gotten so bad that the Land Ministry has changed its stance on unoccupied houses: before, it would only allow local governments to tear them down in areas of depopulation. As of this month, it will allow all municipalities to tear them down anywhere, but warned that they might get sued by the owner if they razed a house under administrative subrogation. And to motivate owners to tear down their house, the central government and municipalities will cover 80% of the costs!

The abandoned-house phenomenon illustrates how the real economy gnaws relentlessly on Japan. It has nothing to do with interest rates, liquidity, and the value of the yen: there simply aren’t enough people to fill any of the 7.57 million vacant homes. Next year, there will be even fewer people. And more vacant homes.

For foreigners, piling into this market is unappetizing: with Abenomics hell-bent on devaluing the yen, their investment is destined to lose value. So now the solution is to raze these houses across the nation, largely at the expense of a government that is already up to the nose in debt and can only stay afloat because the Bank of Japan has promised to print whatever it takes – that’s how far Japan has boxed itself into a corner.

The status of the US dollar as the world reserve currency gives the US tremendous advantages. Among them: it allows the Fed to export inflation, while the Federal Government can run a huge deficit with impunity. But now an angry Russia has had enough! Read.... Russia’s Plan For The BRICS To Dismantle The Dollar System

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 05/15/2013 - 10:25 | 3564560 FeralSerf
FeralSerf's picture

I've come to believe that AnAnonymous is not a real Chinese person. His writing style differs too much from them. I think he's just another administration taxpayer paid shill that frequents internet blogs and message boards.

Wed, 05/15/2013 - 14:31 | 3565716 AnAnonymous
AnAnonymous's picture

Best. 'American' style. From one fantasy into other.

'Americans' know no other way to cope with the reality of an 'american' way: fantasy.

Welcome to an 'american' world, cosy place to live you'll see.

Wed, 05/15/2013 - 02:04 | 3563772 Vlad Tepid
Vlad Tepid's picture

I fail to see your point, Wolf.  A house or any structure is a depreciating asset.  The crumbling houses you see are owned by the family or in some cases the banks, but no one wants to pay the money to remove the structure.  These are mostly old buildings with "character" and mostly in the sticks though there are some in urban areas.  The 30 year houses were designed to be demolished and ARE just like your place in Ekoda.  So what's the gripe?  Are you going to now write a missive about decaying barn structures in the upper Midwest and connect it to some vague notion about the end of American civilization?

Wed, 05/15/2013 - 08:10 | 3564136 AnAnonymous
AnAnonymous's picture

The 'american' art of burying one's head into the sand.

So as reported by 'americans', the very industrious, entreprenial, hard working people residing in Japan leave housing structures roting on the place and there is nothing to deduce from that?

Maybe time for 'americans' to stick to what they do best, like 'american' indignation when watching a video showing the evisceration of a soldier in uniform (anyone ever seen the Syrian rebels sporting clear marks to distinguish themselves from the rest of the population? One could have thought it was one of the 'american' trips when it come to combatants, terrorists or so, that should not be covered by the Geneva conventions since they were not in uniform)

Yes, 'americans' should stick with what they do best and that certainly not includes dealing in reality.

'American' once...

Wed, 05/15/2013 - 08:55 | 3564237 Lost My Shorts
Lost My Shorts's picture

Funny thing is, AnAnonymous is the only real Chinese person that many on ZH know.  But it's OK, he is fairly typical from my limited experience -- sophomoric and insanely nationalistic.  Not typical of the elites, who are more polite and have all their money invested overseas.  But typical of the powerless nobodies.  Maybe there is a lot of lead in the water there.

Wed, 05/15/2013 - 14:33 | 3565723 AnAnonymous
AnAnonymous's picture

But typical of the powerless nobodies.
____________

A lot of 'americans' are powerless when facing 'americans', much talks, much noise but in the end, same as always, behaving the 'american' way.

Wed, 05/15/2013 - 08:42 | 3564197 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous pouring more drivels:

Yes, 'americans' should stick with what they do best and that certainly not includes dealing in reality.

Good display of the bewilderment of insanitation.

Projection is a nasty thing.

Wed, 05/15/2013 - 14:34 | 3565728 AnAnonymous
AnAnonymous's picture

From an 'american' so enamoured with the quest for symetry that self immolation is put on par with use of biological weapons, this is somehow a distinction.

Thanks.

Wed, 05/15/2013 - 08:02 | 3564124 hardcleareye
hardcleareye's picture

The point being......."The abandoned-house phenomenon illustrates how the real economy gnaws relentlessly on Japan."

In a healthy growing population people will renew or replace those structures.

With regards to the decaying barn structures, that too is an illustration in the changing farming practice, from small family farms to large Corporate mechanized farming, what this practice leads to remains to be seen.....

Japan is depopulating and is facing a crisis, they have now hit the 230% of pubic debt to GDP.

This will not end well for Japan........

Wed, 05/15/2013 - 01:32 | 3563709 laomei
laomei's picture

Japan builds housing even worse than the US does.  It all needs to be torn down in 20 years or less, with vacant land being worth more than a house.

Wed, 05/15/2013 - 08:10 | 3564137 hardcleareye
hardcleareye's picture

I have seen some spectacular 800 year old plus timber frame structures in Japan......  these structures are truly art forms... they are still being constructed, the Japanese Timber Framing Guild is worthy of much respect...

http://www.timberframersguild.org/news/Kezuroukai2005inJapan/photos/phot...

Wed, 05/15/2013 - 00:48 | 3563644 Judge Crater
Judge Crater's picture

Very interesting report.  The 800 pound gorilla in the room is the radioactive Fukishima Daiichi reactor complex.  Until Japan finds a way seal off radiation from those busted reactors, everyone downwind from those reactors has to worry about airborne low level nuclear fallout.  Downwind includes Tokyo. 

Wed, 05/15/2013 - 10:13 | 3564509 FeralSerf
FeralSerf's picture

Downwind includes North America.

Tue, 05/14/2013 - 18:54 | 3562567 Zgangsta
Zgangsta's picture

This article is nothing without pictures.

Tue, 05/14/2013 - 18:49 | 3562543 underman
underman's picture

Why does Detroit still have 4 major sport teams?

Tue, 05/14/2013 - 18:55 | 3562573 Big Corked Boots
Big Corked Boots's picture

Bread and circuses.

Tue, 05/14/2013 - 18:55 | 3562571 Zgangsta
Zgangsta's picture

Why does Green Bay have one major sports team?

Tue, 05/14/2013 - 23:16 | 3563402 Hopium Dealer
Hopium Dealer's picture

The Green Bay Packers are actually owned by the people of Green Bay and not a corporation of multi-million dollar family. Thus, since the people of the town are the shareholders, that is why they have a football team.

Tue, 05/14/2013 - 21:08 | 3562953 mofreedom
mofreedom's picture

why is minnesota a state?

Wed, 05/15/2013 - 07:11 | 3564034 Parisnights
Parisnights's picture

why is minnesota a state?

It's actually just southern Canada.

Tue, 05/14/2013 - 23:26 | 3563440 azzhatter
azzhatter's picture

Why is a complete shitstain like Obama president?

Wed, 05/15/2013 - 10:11 | 3564502 FeralSerf
FeralSerf's picture

Why are bananas curved?

Wed, 05/15/2013 - 08:55 | 3564240 Van Halen
Van Halen's picture

Have you noticed what voted Obama into office?

Tue, 05/14/2013 - 18:25 | 3562451 Big Corked Boots
Big Corked Boots's picture

"Many of these structures were cobbled together during the postwar decades into the 1970s, “one-generation buildings” designed to last 30 years."

Newsflash: That's about how long the current crop of US mass-produced tract homes and McMansions will last for - if you're lucky. Back in the day (2000-2008) I was doing spec office buildings and shopping malls that were designed to survive the next owner's due diligence, which would be 5-15 years after I got my final payment. The developers dreamed of finding a fat REIT that didn't look too hard at what they bought.

Spreadsheet jockeys looking to make the next lease payment on the Bentley.

Tue, 05/14/2013 - 16:59 | 3562189 rosiescenario
rosiescenario's picture

....and not that very long ago Japan was held up to be the paragon of capitalism, its stock market sporting the highest valuations, and Tokyo real estate priced by the square inch....and their conceit back then was that it would never end and only get better.

Tue, 05/14/2013 - 16:12 | 3561999 rustymason
rustymason's picture

Thanks to this Wolf Richter article, I have discovered an interesting new hobby: Haikyo.

http://www.michaeljohngrist.com/ruins-gallery/

Tue, 05/14/2013 - 22:53 | 3563321 Billygirl
Billygirl's picture

Wow. I love Haikyo! Thanks Rusty - now a new hobby for me too! Plenty of old abandoned buildings where I live.

Tue, 05/14/2013 - 18:07 | 3562375 Never One Roach
Never One Roach's picture

rusty, fascinating stuff...thanks!

Tue, 05/14/2013 - 16:05 | 3561984 Fuku Ben
Fuku Ben's picture

I've got waterfront property in Fukushima

Tue, 05/14/2013 - 15:41 | 3561901 lolmao500
lolmao500's picture

Post pics or something.

Tue, 05/14/2013 - 15:56 | 3561958 Aguadulce
Aguadulce's picture

Detloit is having an economic renaissance, what are you talking about?  Housing and the auto industry are cant miss investments right now.  Japan is no different.

Tue, 05/14/2013 - 15:14 | 3561788 Rustysilver
Rustysilver's picture

A report on TV showed that many farms were abandon too. Farmers got old and no replacement. Sad really. No mechanism to remedy, i.e., sell it or give away to some that would use it.

Tue, 05/14/2013 - 14:40 | 3561566 rustymason
rustymason's picture

Are Japanese chicks a hotter commodity now that they are more scarce?

Tue, 05/14/2013 - 16:20 | 3562041 Fuku Ben
Fuku Ben's picture

There's a radiation joke in there somewhere

 

Tue, 05/14/2013 - 17:53 | 3562334 Taint Boil
Taint Boil's picture

 

 

Hiroshima vs Detroit

[1945 vs 2012]

Tue, 05/14/2013 - 15:29 | 3561858 JamesBond
JamesBond's picture

 hottest in the world

 

 

jb

Tue, 05/14/2013 - 17:19 | 3562250 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

the cambodians might give them a run for their money

Tue, 05/14/2013 - 14:17 | 3561546 Stuck on Zero
Stuck on Zero's picture

The Japanese have cleverly solved the problem of abandoned buildings with the "building eating machine." (http://www.cbsnews.com/video/watch/?id=50141351n).

 

Tue, 05/14/2013 - 14:16 | 3561540 Son of Loki
Son of Loki's picture

Japanese used to head off to Hainan Island for escaping Fuki radiation but now that Abe has pissed the PRC off, that may not be their best option.

Tue, 05/14/2013 - 14:12 | 3561512 pashley1411
pashley1411's picture

The article keeps saying "real economy, real economy".    But the economy is working just fine, thank you; less demand, same supply; marginal buildings abandonned, still-occupied buildings depreciate in price.   You would have to be in the media/academia/government/real estate to think any other result would happen.

As much as we beat up on the governments of Japan, and the EU, the facts are that the underlying population is declining, and growing older, while expenses, especially the government bureaucracy, and old age spending, increases.

Is there anything that government can do other than manage the decline?          

Wed, 05/15/2013 - 02:44 | 3563815 SilverSavant
SilverSavant's picture

Yes, they can shrink by 90% and get the ----out of the way.

Tue, 05/14/2013 - 14:11 | 3561508 0b1knob
0b1knob's picture

Isn't this the inevitable result of Japan's declining population?   And it will only get worse.

The last time the world experienced a decline in population was during the Black Plague over 500 years ago.  That decline led to the concentration of wealth, political power and land ownership in the hands of the 1%.

The more things change....

Wed, 05/15/2013 - 02:56 | 3563827 dunce
dunce's picture

The black death plague ran its course and was over. The declining population in Japan is the result of a low birth rate that shows no sign of changing because it is their choice not chance. The birth rate in england was so high that the population increased even as they were burying people.

Wed, 05/15/2013 - 10:01 | 3564456 Treason Season
Treason Season's picture

"They're bonkers!"

Wed, 05/15/2013 - 02:03 | 3563768 cynicalskeptic
cynicalskeptic's picture

The Black Death actually benefitted the population as a whole with the 'average' person benefitting more than the elites.  Whenpeople died their property went to surviving relatives, increasing the average wealth across all class lines.  

More importantly, the loss of a large number of WORKING people led to labor shortages - as noted.  Supply and demand - demand for labor, shortage of people to do it - cost of labor increases, wages go up AND the restrictions on labor and employment lessen.  Serfdom is weakened and you see a growth in trades and towns.

We have an endless pursuit of the cheapest possible labor costs now - either by exporting production facilities to cheap labor countries or bringing cheap labor to locales where work can't be exported. 

Wed, 05/15/2013 - 08:11 | 3564133 bunnyswanson
bunnyswanson's picture

Wrong response.  So sorry/

Tue, 05/14/2013 - 20:48 | 3562891 Diogenes
Diogenes's picture

You mean it resulted in the collapse of the feudal system and the seeds of the Renaissance. Shortage of workers put a premium on labor. Land owners had to bid up the value of labor to get workers for their acres. Marginal land went out of production, only the best land was cultivated.

Houses, furniture, clothes, tools were in abundant supply,

As terrible as the plague was it left the ordinary people richer and more powerful than ever, while diminishing the power of the rich and noble.

Wed, 05/15/2013 - 07:59 | 3564119 AnAnonymous
AnAnonymous's picture

It set up the ground for the establishment of the 'american' middle class. Apart from that...

Tue, 05/14/2013 - 14:21 | 3561571 rustymason
rustymason's picture

Those islands are way too crowded anyway.

Wed, 05/15/2013 - 02:29 | 3563800 i-dog
i-dog's picture

They're less crowded than Belgium, the Netherlands, or Puerto Rico ... or New York State, Massachusetts, Maryland, Florida. Just sayin'...

Do NOT follow this link or you will be banned from the site!