Tokyo is one of the greatest and most advanced cities in the world. The average monthly rent for a 2 BR apartment in Tokyo is under $1000. Compare that to NYC, SF, DC, or the big European metro areas.
They functionally don’t allow NIMBY-ism, and their housing market is relatively unregulated in terms of zoning.
We (big American cities and metro areas) should be more like Tokyo in housing policy. Lower housing prices due to market action (rather than rent controls) would greatly benefit the economy.
The article is paywalled, can you summarize the policies that you think we should implement? It seems to me that the market would be perfectly content building 10 luxury apartments to sell for $2.5m a pop versus building 83 much smaller units at $300k a pop. Same amount of money for the developer, fewer headaches.
I think two things are generally true – residents have worked with local governments to prevent large quantities of housing being built in expensive areas, and building large quantities of housing is the best idea for making expensive cities affordable. I’m just not sure that getting those local governments out of the way would fix it; rather, I think those local governments need to force residents to accept new housing developments that they otherwise wouldn’t want, and I’m not sure how that works in a democracy. I’m curious how the article suggest we overcome that.
How many times do we have to explain this to your types : absent strong moral imperatives and social consequences for breaking them, the Invisible Hand does. Not. Work. Even its inventor acknowledged this - he was a moral philosopher before turning [del]social traitor[/del]economist.
I haven’t read the article because it is behind a paywall, so I am going off your post alone. I don’t know whether we can attribute Japan’s low housing costs to their housing policy. Japan has a major population problem and CNN recently ran an article saying the country had to start giving away houses for free (Jozuka, 2019). In addition to the shrinking population it seems that many people are moving to the cities, which means demand for city housing is unhealthily high. Combine this with the fact that they are offering free housing in rural areas, I would say it is very possible that urban housing is low due to abnormal and undesirable conditions, not necessarily the “housing policy”. I quote,
The implication is that this may be a case of correlation, not causation. Therefore your proposal rests on shaky grounds.
FYI, I google “Wall Street Journal Japan Housing” and the google link let me read the article. I think they have some dealie where if you come from google you can see the article but if it’s just a hotlink, they want you to pay.
The article is barebones and doesn’t say much more than iiandyiiii said. It doesn’t explain why the developers are building cheaper buildings with lots of economy apartments instead of a few luxury apartments.
I wonder if Max S isn’t right and this is a result of falling population. Though I suppose the urban centers could be more attractive to the population and accelerate the depopulation elsewhere while creating a mini-population boom in the cities themselves?
According to this article the average Tokyo three-bedroom apartment is 753 square feet, which actually compares favorably to the majority of apartments in places like New York City.
With more and more “micro” apartments being built, the price of renting in such a [del]hive[/del] place should become more reasonable over time.
It sounds like people want to be in the cities. If there are free houses in rural areas that no one is taking, then those are the undesirable conditions that people are avoiding.
I don’t know if I can follow your logic here that people wanting to live in the cities indicates that they are undesirable. Could you explain?
I agree. ETA:, and I meant to say more, but the edit window is closing.
I’m all for even micro apartments. Anywhere you can lay your head that is safe and out of the elements.
If people want to have big houses, they can buy them for cheap in rural areas, and spend their weekends of vacations there.
There may be only 8 people who want to and can afford to live in a 2.5m apartment, while there are 100 people that are in the market for housing around 300k.
Would make the most sense for a developer to do both, to saturate both markets.
You have it exactly backwards, the people aren’t being forced into anything, they just would no longer given the ability to block it.
If your neighbor wants to sell their house to a developer who will replace the 3 acre estate with 12 1/4 acre lots, then what is stopping him is not the free market, it is you and your other neighbors who would work to block the sale and development. Currently, the govt is on your side, and would work to prevent your neighbor and the developer from putting in the developments that they want. The change would not be forcing you to live in a housing development that you don’t want to live in, but to accept that other people may live where you didn’t want them to.
This seems like a distinction without a difference. Right now local governments block development because that’s what the voting residents want those local governments to do. If the government tries to get out of the way and allow development against the wishes of the residents, they would be voted out and replaced with people who would go back to blocking development…
Is it a reasonable assumption on my part that your extremely narrow answer is intended to convey that in a city with high rents, you would prefer to cap the increases in rents, knowing that shortages of rental units is an easily foreseeable consequence; rather than increase supply, knowing that lower costs would logically follow?
By “abnormal and undesirable circumstances” I meant national circumstances, specifically the shrinking population and forecasted extinction of rural communities. The cities are not undesirable.
Japan as a whole has a population problem (i.e. it’s declining). But at the same time, people are continuing to flow into major cities. The population of the Tokyo metropolitan area is still increasing.
I can’t read the article either but I think it’s true that Japan has a lot more low cost housing available. There is also a lot of new development going on. My parents recently moved to an area in Chiba, about 45 min by train from central Tokyo. It’s a completely new development area - the train station is new, surrounded by several high-rise apartment/condo buildings that are still under construction. In fact, even the railroad is less than 10 years old. Walk 10 minutes and you get to even more (cheaper) condo buildings as well as new neighborhoods of small detached houses. All this new development is still going on, within commuting distance of central Tokyo.
Although I think the extensive public transit network also helps with the housing availability. The railway map of the Tokyo metro area looks like this. And that’s just the trains. Every one of those train stations connects to several bus routes.
Then what did you mean by:" I think those local governments need to force residents to accept new housing developments that they otherwise wouldn’t want, and I’m not sure how that works in a democracy. "?
Earthquakes - Eyeballing it from satellite view, probably about 20% of the island is concrete. Crossing Tokyo takes about 2 hours on a train with no stops. They simply can’t build tall and pack people into a small, confined area. The cities of the country have to be giant sprawls of small apartment buildings and the economy has to operate around the principal of decentralization because any tall buildings would get destroyed by their earthquakes. There’s no “downtown Tokyo”. The whole city is a kaleidoscope of office buildings, apartments, convenience stores, red light districts, schools, temples, and hospitals. New York has expensive real estate because you need to get into Manhattan. There’s no similar pinch point for Tokyo, it’s all relatively even across the whole sprawling mass. Your offices could be almost any direction from where you live no matter where in the city you live.
Japan has a history/culture of disposable construction. They used to build using paper and minimalist wood structures on the basis that the people expected their houses to be mostly demolished by the next earthquake, typhoon, fire, or war between daimyo. Their construction philosophy was not to create structures that could withstand that all, it was to build something that would simply melt under the abuse and could then be easily patched back together with some paper and (figurative) duct tape. From what I have been told, that philosophy continues over to modern day. They destroy and construct new buildings like they’re tissue paper. You’ll turn a corner and a mall that was there for 4 years will be a perfect flat patch of dirt, one day. The mall was there last week, now it’s pristinely gone and you could start a corn field in the place that it had been. In another month, there could be a full and complete apartment building in its place. It’s relatively amazing, but a large component of it is that they build cheap and they don’t do custom, it’s all prefab parts and stamp-out designs that have been done before thousands of times by the same company.
I don’t even understand what this means. What are you saying doesn’t work? How does it not work? Can you even say what the “invisible hand” is supposed to do?
As much as I’ve used and liked AirBnB in the past, I’d also argue that they’ve become a bit of an urban scourge as well. People buy up properties and use them as short-term rentals for investment purposes, and it just ruins affordability for some low-wage workers.
The inventor did not acknowledge that and history pretty clearly shows that the invisible hand works - or, at least, I doubt that you are a subsistence farmer in serfdom to a wealthy landowner. How many such people do you know? What about if you went back 100 years? 200 years? 500 years?
I don’t know a whoooooole lot about this, but my understanding from having lived there for a time is that Japan doesn’t have the same local zoning restrictions on construction. A lot of that stuff is federally controlled, which means local residents can’t so easily squelch new development in order to pump up their personal property values. That’s probably not the whole story, declining population has possibly also contributed to lower housing prices, but the zoning practices really are different. They simply don’t have the same class of parasites that we see in places like San Francisco.
This makes no apparent sense to me.
The kids leave local areas for places like Osaka and Tokyo. Yes. Which means demand for housing in rural areas can drop to essentially nothing (true), but this also necessarily means that demand is higher in urban areas like Tokyo and Osaka than it would otherwise be without that population shift. I lived in a small-ish city in Japan for a while, and plenty of the kids I knew got the hell out of there as soon as they could. They went to the big city, and they needed places to stay. A decrease in rural housing demand necessarily means a corresponding increase in demand someplace else.
All else equal, higher demand would be sending prices up. But prices aren’t terrible in places like Tokyo, precisely because all else isn’t equal: supply has generally been able to keep pace with demand. It’s pretty easy to get a smallish but decent place. I know people who have done it. The whole point of the OP is that Tokyo has always been able to find/construct housing for its new arrivals. Of course, there are fewer new arrivals now than before (population decline), but the difference in zoning shouldn’t be dismissed so lightly.
There is no rentier class of local landed property owners that can suck the blood of new arrivals because a lot of those regulations are simply not determined locally.