The Impact Of Home Upgrades On Your Japanese Insurance Premiums – Unlike other countries, Japanese houses lose value over time. But as the population dwindles, can Japanese cities finally learn to slow down and recover?
In the suburban neighborhood of Midorigaoka, about an hour by train from Kobe, Japan, all the houses were built by the same company in the same factory. These steel-framed homes with paneled walls and ceilings were clustered by the hundreds in what was once a brand new suburban town. But they were not designed to last long.
The Impact Of Home Upgrades On Your Japanese Insurance Premiums
Daiwa House, one of the largest manufacturers of prefabricated houses in Japan, built this city in the 60s during the post-war housing boom. It’s not unlike the suburban neighborhoods of the Western world, with verandas, balconies and rooflines that shift and follow blocks of gently winding roads up and down. Most of these homes, built in the ’60s, are no longer standing, long since replaced by newer models finished with ceramic faux brick siding in beige, pink and brown. After all, the lifespan of most of these prefab houses—like most houses in Japan—is only about 30 years.
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Unlike other countries, Japanese houses gradually depreciate in value over time, becoming completely worthless within 20 or 30 years. When someone moves out of a home or dies, the home, unlike the land on which it sits, has no resale value and is usually demolished. This scrap-and-build approach is a quirk of the Japanese housing market that can be explained in various ways: shoddy construction to quickly meet demand after World War II, repeated revisions of building codes to improve earthquake resistance, and a cycle of poor maintenance due to to the lack of any incentive to make homes resaleable.
In Midorigaoka, even new homes built in the 80s and 90s are nearing the end of their expected lifespan. Under normal circumstances, their days might be numbered.
But at the end of one quarter there is a sign that things are changing. Scaffolding surrounds the empty house on the corner, and workers from Daiwa’s house rattle inside. They don’t demolish the house, but renovate it: changing the layout, tearing down walls, opening up the kitchen and increasing the insulation. Instead of tearing down the house so the next buyer can build something new, they restore it from the inside out and put it back on the market. It’s a relatively rare commodity, but one that’s becoming increasingly common throughout Japan: a used home.
“For the first time, Japanese people are starting to appreciate living in old houses,” says Noboru Kaihou, public relations officer at Daiwa House.
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From major metropolises such as Tokyo and Osaka to struggling mid-sized cities and suburban apartment complexes, renovated buildings represent an emerging niche in the real estate market, symbolizing the dramatic transformation taking place in Japan. The country is shrinking, with negative growth rates expected to reduce its current population from 127 million to 88 million by 2065. It is also an aging society, and in 20 years more than a third of its residents will be aged 65 or older. As the population shrinks and ages, it also concentrates in metropolitan areas, leaving millions of suburban and rural homes empty. According to the Nomura Research Institute, the current vacancy rate nationwide is about 13%, and this figure is expected to exceed 30% by 2033. Combined with Japan’s stagnant economy, these statistics convinced many that the market for new buildings would begin to grow. dry.
Like Daiwa House, many other major home manufacturers are getting into the renovation business. About 45 minutes north of Tokyo, the country’s largest prefab home manufacturer, Sekisui House, operates a fleet of homes featuring the latest designs. Most are aimed at the high end of the market, with large multi-story floor plans and luxury finishes, but tucked away in the corner is a more modest two-story home. The ground floor is furnished like a typical house built in the 80s: small rooms, heavily divided spaces and even an armchair in the living room. Upstairs, the same layout has been updated, with the kitchen opening to the dining area and walls pushed back or removed altogether. The traditional tatami living room in the old layout is transformed into a media room with a low sofa and flat-screen TV.
For a company, this simple renovation can turn a vacant home into a new sale. “If we can renovate these old houses, their value won’t go to zero and we won’t have to demolish them,” says Kenichi Ishida, managing director of Sekisui House. “Young people today don’t have much money, so they don’t hesitate to buy old buildings.”
In Takatsuki, halfway between Osaka and Kyoto, this economic reality is evident. “A lot of the younger generation in my area live in renovated houses,” says one 39-year-old resident. He lives in the renovated Sekisui house with his wife and two small children and notes that the price of the renovated house was significantly lower than the new one. “We want to save money on care for our children and our parents,” he says. “To us, a renovated house located near my parents’ house has much more value than a newly built house located far away.”
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Models showing before and after renovation floor plans of a home built by home builder Sekisui House at their showroom north of Tokyo, Japan. Photo: Nate Berg
It’s not just the big homebuilders who are catching on. Zoe Ward is a real estate agent in Tokyo and CEO of Japan Property Central, which specializes in finding homes for expats, and she says buyers are starting to reconsider the value of older buildings. In recent years, new companies have opened that specialize in renovating old premises. “Sometimes they will gut the entire building down to the concrete shell,” she says. “The outside will look no different from the buildings around it, but the inside will look like a brand new home.”
As demand for housing grows in Tokyo, renovation companies are looking for people willing to sell them. “They call us every day,” Ward says.
Repair is not always possible. In the Tokyo suburb of Tachikawa, Shiro Kawashima and his wife, both middle-aged, stroll through a man-made neighborhood lined with model houses. Homes built by prefab manufacturers and local carpenters are on display and available for tours led by eager salespeople. A couple living nearby buy a new house, albeit reluctantly. “I’m very proud of my old house,” he says. “It’s unfortunate, but I’ll have to tear it down.”
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He said the house is 70 years old (which is rare) and suffers from structural damage that is prohibitively expensive to repair. The move is also out of budget, so his only option is to demolish the old house and build anew. The houses on display here do not attract him. “Not at all,” he says, disappointed. “I just want a simple, basic structure,” he says. Just like his current home.
Young people, especially in urban areas, have more flexible options. To accommodate them, new companies are going beyond conventional housing. In recent years, a number of small development companies have been buying up old buildings and using them in new ways. Tokyo-based ReBITA is converting apartment buildings, offices and company dormitories into shared workspaces – affordable rental apartments with shared kitchens and work areas. Just five years ago, such spaces were rare in Japan, says Azbi Brown, director of the Institute for Future Design at the Kanazawa Institute of Technology in Tokyo. “It’s a new way of living and I don’t think a lot of the big housing companies have figured it out yet.” He says it’s as much about reducing housing costs as it is about moving towards a more community-oriented lifestyle. Some even see these types of social spaces as a roundabout way to reverse the country’s low birth rate.
In the face of demographic trends in Japan, the Tokyo Metropolitan Government is undertaking its own measure of social engineering, focusing on renovating the mid- and high-rise apartment buildings built throughout the city in the 60s and early 70s. To give new life to these buildings, the capital is encouraging families with young children to move, giving priority to their applications. It also helps people qualify for housing if they choose to live near their elderly parents. “All of these efforts are about addressing the challenges of our aging society,” says Hiroyuki Ebina, director of planning and housing at the Urban Development Bureau.
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But it’s not just about upgrading the permanent pool. The buildings in question are often maintained through tenant associations, and as old tenants die, there is less money available for post-earthquake maintenance and reconstruction. To make a greater contribution to these efforts, the National Government’s Urban Renewal Agency is trying to involve