7 ms·

One other reason that density might have been more politically acceptable in Japan is that houses are not used as a vehicle for middle-class wealth accumulation

One other reason that density might have been more politically acceptable in Japan is that houses are not used as a vehicle for middle-class wealth accumulation. On the spot.

aphextron 9y ago
>One other reason that density might have been more politically acceptable in Japan is that houses are not used as a vehicle for middle-class wealth accumulation. How do the Japanese build wealth, then? Buying a desirable home in a solid market is pretty much the only way for an average person earning the median wage to make it into the middle class.
- spoonie 9y ago
  Investing in the stock market over the long term is both simple and accessible to almost everyone.
  - kaycebasques 9y ago
    But in the case of Japanese specifically, I’m sure some of them are weary of stocks after the big crash in the 80s.
    - davidw 9y ago
      Housing prices can crash too. See: the US.
      - kaycebasques 9y ago
        The question here was “how do Japanese build wealth?” and someone suggested the stock market, so I replied that in the Japanese case, that might not actually be likely, because they had a big crash in the 80s which they have yet to recover from. No offense intended, but your comment doesn’t seem relevant to the discussion.
        davidw 9y ago
        The point is that any asset class can crash, and it's very relevant. People need to stop treating housing with the expectation that the value of a house should grow and grow and grow, because that's part of how we got to all this NIMBY bullshit.
        deleted 9y ago
        [deleted]
        Armisael16 9y ago
        It really isn't relevant. The question was "How do the Japanese build wealth, then?" and your response was "the US housing market can also crash".
        richardknop 9y ago
        They don't. Personal debt levels have been going up and savings diminishing in Japan, while wages have been stagnant for decades. Japanese middle class has been getting poorer and poorer consistently.
- rm_-rf_slash 9y ago
  There was an analysis on HN not too long ago that extrapolated real estate and stock market valuations back 150 years or so and concluded that the return on investment for both were roughly at pairity. Buy an index fund.
  - leetcrew 9y ago
    the ROI for stocks would have to be significantly higher than the ROI from real estate for it to make sense for a working/middle class person to invest in stocks instead of the structure they live in. you need to pay for housing either way.
    - jogjayr 9y ago
      > you need to pay for housing either way. Yes but you don't have to pay the same amounts. There's a reason "rent-or-buy" calculators exist.
      - closeparen 9y ago
        The insane levels of year-over-year appreciation/rent hikes make any calculator say "buy" in expensive major cities, regardless of the difference in cost today.
        jogjayr 9y ago
        Citation needed. That's not the case in the SF Bay Area, Manhattan/Brooklyn, Vancouver, or Toronto. The new tax bill's provisions to cap mortgage interest deductions has further tilted the balance against expensive houses.
      - com2kid 9y ago
        Once owned outright, a home also serves as insurance against economic downturns. Rent, 4 or 5 year economic slump and people are out of a home. Ownership doesn't lead to this. Even mortgages have more forgiveness for late payment than most rental agreements. Multi-generational property ownership also helps. Buy a good house now, and your kids/grand kids have insurance against economic downturns.
- Barrin92 9y ago
  the simple answer is that they don't. They have recognised that closely networked cities, short commute distances, easy access to public services has significantly more advantages than building your own little castle in the prairie. You've basically snuck in a tautology in your question. 'Breaking into the middle-class' in the US has simply become synonymous with owning a house, without really asking whether owning that house actually provides people with material benefits to begin with. Like Switzerland, Germany or South Korea among some other countries Japan is very much a nation of renters. This has arguably saved them from some very grave problems.
  - patio11 9y ago
    Japan is very much a nation of renters 62% of households in Japan own their own home. This is ~10% above Germany and ~1.5% below the US.
  - crzwdjk 9y ago
    Not only does Japan have a homeownership rate similar to the US, but a pretty significant fraction of those owners own single family detached homes, which make up the bulk of Japanese suburbs. The main difference from the US is the different zoning regime which doesn't force homeowners to pay for a minimum quota of land in order to buy a house, and suburban houses on 1000 square foot lots are not uncommon.
  - aje403 9y ago
    "without really asking whether owning that house actually provides people with material benefits to begin with." I'm literally speechless to this
- jstarfish 9y ago
  Lack of consumer credit debt, and a steady savings rate. > Buying a desirable home in a solid market is pretty much the only way for an average person earning the median wage to make it into the middle class. Not true. You, too, can ascend from poverty if you don't fall into the finance-everything lifestyle of the (former) American middle class.
- delecti 9y ago
  Isn't that a chicken and egg situation? If homes aren't considered to be equivalent to wealth, then not having a house doesn't preclude the average person from membership in the middle class.
- kaycebasques 9y ago
  I’m also keen on this question. Seems like there’s a broad vested interest in maintaining a scarcity of housing supply. Is there a compromise that can keep homeowners mostly profitable while allowing for others to get reasonable rents / purchase prices?
  - azernik 9y ago
    There is no such compromise. High and rising house prices are inherently incompatible with low and flat housing prices. These are two counterparties on opposite sides of the same market.
  - pilom 9y ago
    If housing prices don't go up, landlords make profits from rents rather than appreciation. Currently in SF, if housing wasn't appreciating, landlords would demand a greater percentage of the purchase price from renters, or house values would stabilize at a lower point where rent receipts are enough to make a reasonable return.
- ghaff 9y ago
  They mostly haven't in recent years. Japanese homes are famously disposable [1] and there's generally been an asset price collapse followed by stagnation since the early 1990s. [1] https://www.theguardian.com/sustainable-business/disposable-homes-japan-environment-lifespan-sustainability https://www.theguardian.com/sustainable-business/disposable-...
- jogjayr 9y ago
  > Buying a desirable home in a solid market is pretty much the only way for an average person earning the median wage to make it into the middle class. There's also low-cost index funds and ETFs...cheaper, lower barrier for entry, more diversified, more liquid. The government won't seize them for non-payment of property taxes in case of unemployment or health issues. I'd argue they're a better choice than a home for an average person to build wealth. Index funds and ETFs have been around since the 70s - nearly 50 years.
  - toomuchtodo 9y ago
    The leverage you can get on real estate with a mortgage far exceeds any margin account. The US gov subsidizes real estate investment with long duration fixed mortgages.
    - jogjayr 9y ago
      Do we really want the "average person" investing with leverage? That didn't go so well 10 years ago. Besides, GP stated that real estate ownership was the "only way" for Joe-sixpack to get into the middle-class. Homeownership may well have financial and tax advantages but it's by no means the sole way to build wealth.
      - toomuchtodo 9y ago
        While not the sole way to build wealth, it’s one of the most accessible ways for anyone who isn’t already wealthy and intends to live somewhere more than a few years. I could, tomorrow, go buy a duplex, triplex, or quad with only 3% down and immediately rent out all units except the one I’m living in. Usually a much higher cash on cash return than index funds when done properly, your co-tenants are paying your rent, and you’re getting to depreciate an asset annually on your taxes that is most likely appreciating. How could you tell people not to take advantage of such a good deal?
        jogjayr 9y ago
        > I could, tomorrow, go buy a duplex, triplex, or quad with only 3% down and immediately rent out all units except the one I’m living in. But that's not something an average person does. The poster I replied to was speaking of real estate wealth building solely in terms of buying a house, living in it till you retire, then selling it at an appreciated value and going live in Florida or wherever. (or alternatively change house every 10 years, rolling the appreciated property value into a bigger house every time) What you're talking about is the work of a real estate investor, and is far more time-consuming and involved than buying a few index funds on Vanguard. Researching properties, finding and screening tenants, performing or managing repairs is a non-trivial amount of work. You're trivializing the work of getting into landlording (maybe you're already doing it so you underestimate how much work it is for someone who has no experience doing it). If it really was that easy to earn better than index fund returns, everyone would be doing it and the returns would naturally come down. > While not the sole way to build wealth, it’s one of the most accessible ways for anyone who isn’t already wealthy and intends to live somewhere more than a few years. I don't even agree with that. To buy a single share of an ETF you need $50-100 max to spare. To put even 3% down on a property that you can rent out, you're talking thousands of dollars + decent credit for getting a mortgage on the property.
- samlevine 9y ago
  The same way the Germans do, they save money. Rising housing prices have played out the same across the Anglophone world. It's not sustainable as a means to get the lower classes into the middle class, because the higher prices rise the more debt they need to take on to join the game. Housing is something people consume. It's durable, but so are cars and imagining them as being a gateway investment to the middle class because they will cost more in the future should be just as silly as for housing.
  - Armisael16 9y ago
    The house itself normally isn't appreciating; it's the land that does. People don't consume land (usually).
  - pm90 9y ago
    Yeah the whole housing structure in the US seems to be geared towards creating a ton of wealth for the real estate business. Which isn't the worse thing; but lets not confuse ourselves that it is a legitimate way to build wealth (it is somewhat so; but you can usually get better returns from other financial instruments over the long haul).
  - aphextron 9y ago
    >Housing is something people consume. It's durable, but so are cars and imagining them as being a gateway investment to the middle class because they will cost more in the future should be just as silly as for housing. But when you're talking a capitalization period on the order of the average person's lifespan, it becomes a new class of asset in my mind. You can't treat something which will pretty much guaranteed always exist until the day you die the same as a usable good.
zeth___ 9y ago
I live an an extremely dense city. Prices are not dropping even when thousands of units are hitting the market every month. The reason is because foreign buyers like to park their money out of their country so it won't get confiscated. When there are multiple real estate agents all of whose promotional material is in Chinese in an English speaking country you have to be willfully blind not to see cause and effect.
- jseliger 9y ago
  Prices are not dropping even when thousands of units are hitting the market every month. The reason is because foreign buyers like to park their money out of their country so it won't get confiscated. [Citation needed] And, furthermore, exporting housing services is a huge, underrated opportunity: http://www.slate.com/blogs/moneybox/2013/05/19/exporting_housing_services_a_huge_economic_opportunity.html http://www.slate.com/blogs/moneybox/2013/05/19/exporting_hou... . We should be doing a lot more of it.
  - zeth___ 9y ago
    Citation on what? The price not dropping? The supply of units increasing? I can't give you a citation on who is buying the units because that is obfuscated by design. If the people trying to hide their wealth put their names on the deeds they have just made sure they stay alive in the dungeon until the sale was finalized.
    - msie 9y ago
      > I can't give you a citation on who is buying the units because that is obfuscated by design. So all you have is a gut feeling. Thousands of units hitting the market each month is a LOT.
      - zeth___ 9y ago
        >So all you have is a gut feeling. Seeing three separate real estate agents having nothing but Chinese brochures in their offices tells me they aren't expecting locals to be buying from them. >Thousands of units hitting the market each month is a LOT. http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0 http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0 This has been going on for close to 10 years now.

One other reason that density might have been more politically acceptable in Japan is that houses are not used as a vehicle for middle-class wealth accumulation. On the spot.

aphextron 9y ago

>One other reason that density might have been more politically acceptable in Japan is that houses are not used as a vehicle for middle-class wealth accumulation. How do the Japanese build wealth, then? Buying a desirable home in a solid market is pretty much the only way for an average person earning the median wage to make it into the middle class.

spoonie 9y ago
Investing in the stock market over the long term is both simple and accessible to almost everyone.
- kaycebasques 9y ago
  But in the case of Japanese specifically, I’m sure some of them are weary of stocks after the big crash in the 80s.
  - davidw 9y ago
    Housing prices can crash too. See: the US.
    - kaycebasques 9y ago
      The question here was “how do Japanese build wealth?” and someone suggested the stock market, so I replied that in the Japanese case, that might not actually be likely, because they had a big crash in the 80s which they have yet to recover from. No offense intended, but your comment doesn’t seem relevant to the discussion.
      - davidw 9y ago
        The point is that any asset class can crash, and it's very relevant. People need to stop treating housing with the expectation that the value of a house should grow and grow and grow, because that's part of how we got to all this NIMBY bullshit.
        deleted 9y ago
        [deleted]
        Armisael16 9y ago
        It really isn't relevant. The question was "How do the Japanese build wealth, then?" and your response was "the US housing market can also crash".
      - richardknop 9y ago
        They don't. Personal debt levels have been going up and savings diminishing in Japan, while wages have been stagnant for decades. Japanese middle class has been getting poorer and poorer consistently.
rm_-rf_slash 9y ago
There was an analysis on HN not too long ago that extrapolated real estate and stock market valuations back 150 years or so and concluded that the return on investment for both were roughly at pairity. Buy an index fund.
- leetcrew 9y ago
  the ROI for stocks would have to be significantly higher than the ROI from real estate for it to make sense for a working/middle class person to invest in stocks instead of the structure they live in. you need to pay for housing either way.
  - jogjayr 9y ago
    > you need to pay for housing either way. Yes but you don't have to pay the same amounts. There's a reason "rent-or-buy" calculators exist.
    - closeparen 9y ago
      The insane levels of year-over-year appreciation/rent hikes make any calculator say "buy" in expensive major cities, regardless of the difference in cost today.
      - jogjayr 9y ago
        Citation needed. That's not the case in the SF Bay Area, Manhattan/Brooklyn, Vancouver, or Toronto. The new tax bill's provisions to cap mortgage interest deductions has further tilted the balance against expensive houses.
    - com2kid 9y ago
      Once owned outright, a home also serves as insurance against economic downturns. Rent, 4 or 5 year economic slump and people are out of a home. Ownership doesn't lead to this. Even mortgages have more forgiveness for late payment than most rental agreements. Multi-generational property ownership also helps. Buy a good house now, and your kids/grand kids have insurance against economic downturns.
Barrin92 9y ago
the simple answer is that they don't. They have recognised that closely networked cities, short commute distances, easy access to public services has significantly more advantages than building your own little castle in the prairie. You've basically snuck in a tautology in your question. 'Breaking into the middle-class' in the US has simply become synonymous with owning a house, without really asking whether owning that house actually provides people with material benefits to begin with. Like Switzerland, Germany or South Korea among some other countries Japan is very much a nation of renters. This has arguably saved them from some very grave problems.
- patio11 9y ago
  Japan is very much a nation of renters 62% of households in Japan own their own home. This is ~10% above Germany and ~1.5% below the US.
- crzwdjk 9y ago
  Not only does Japan have a homeownership rate similar to the US, but a pretty significant fraction of those owners own single family detached homes, which make up the bulk of Japanese suburbs. The main difference from the US is the different zoning regime which doesn't force homeowners to pay for a minimum quota of land in order to buy a house, and suburban houses on 1000 square foot lots are not uncommon.
- aje403 9y ago
  "without really asking whether owning that house actually provides people with material benefits to begin with." I'm literally speechless to this
jstarfish 9y ago
Lack of consumer credit debt, and a steady savings rate. > Buying a desirable home in a solid market is pretty much the only way for an average person earning the median wage to make it into the middle class. Not true. You, too, can ascend from poverty if you don't fall into the finance-everything lifestyle of the (former) American middle class.
delecti 9y ago
Isn't that a chicken and egg situation? If homes aren't considered to be equivalent to wealth, then not having a house doesn't preclude the average person from membership in the middle class.
kaycebasques 9y ago
I’m also keen on this question. Seems like there’s a broad vested interest in maintaining a scarcity of housing supply. Is there a compromise that can keep homeowners mostly profitable while allowing for others to get reasonable rents / purchase prices?
- azernik 9y ago
  There is no such compromise. High and rising house prices are inherently incompatible with low and flat housing prices. These are two counterparties on opposite sides of the same market.
- pilom 9y ago
  If housing prices don't go up, landlords make profits from rents rather than appreciation. Currently in SF, if housing wasn't appreciating, landlords would demand a greater percentage of the purchase price from renters, or house values would stabilize at a lower point where rent receipts are enough to make a reasonable return.
ghaff 9y ago
They mostly haven't in recent years. Japanese homes are famously disposable [1] and there's generally been an asset price collapse followed by stagnation since the early 1990s. [1] https://www.theguardian.com/sustainable-business/disposable-homes-japan-environment-lifespan-sustainability https://www.theguardian.com/sustainable-business/disposable-...
jogjayr 9y ago
> Buying a desirable home in a solid market is pretty much the only way for an average person earning the median wage to make it into the middle class. There's also low-cost index funds and ETFs...cheaper, lower barrier for entry, more diversified, more liquid. The government won't seize them for non-payment of property taxes in case of unemployment or health issues. I'd argue they're a better choice than a home for an average person to build wealth. Index funds and ETFs have been around since the 70s - nearly 50 years.
- toomuchtodo 9y ago
  The leverage you can get on real estate with a mortgage far exceeds any margin account. The US gov subsidizes real estate investment with long duration fixed mortgages.
  - jogjayr 9y ago
    Do we really want the "average person" investing with leverage? That didn't go so well 10 years ago. Besides, GP stated that real estate ownership was the "only way" for Joe-sixpack to get into the middle-class. Homeownership may well have financial and tax advantages but it's by no means the sole way to build wealth.
    - toomuchtodo 9y ago
      While not the sole way to build wealth, it’s one of the most accessible ways for anyone who isn’t already wealthy and intends to live somewhere more than a few years. I could, tomorrow, go buy a duplex, triplex, or quad with only 3% down and immediately rent out all units except the one I’m living in. Usually a much higher cash on cash return than index funds when done properly, your co-tenants are paying your rent, and you’re getting to depreciate an asset annually on your taxes that is most likely appreciating. How could you tell people not to take advantage of such a good deal?
      - jogjayr 9y ago
        > I could, tomorrow, go buy a duplex, triplex, or quad with only 3% down and immediately rent out all units except the one I’m living in. But that's not something an average person does. The poster I replied to was speaking of real estate wealth building solely in terms of buying a house, living in it till you retire, then selling it at an appreciated value and going live in Florida or wherever. (or alternatively change house every 10 years, rolling the appreciated property value into a bigger house every time) What you're talking about is the work of a real estate investor, and is far more time-consuming and involved than buying a few index funds on Vanguard. Researching properties, finding and screening tenants, performing or managing repairs is a non-trivial amount of work. You're trivializing the work of getting into landlording (maybe you're already doing it so you underestimate how much work it is for someone who has no experience doing it). If it really was that easy to earn better than index fund returns, everyone would be doing it and the returns would naturally come down. > While not the sole way to build wealth, it’s one of the most accessible ways for anyone who isn’t already wealthy and intends to live somewhere more than a few years. I don't even agree with that. To buy a single share of an ETF you need $50-100 max to spare. To put even 3% down on a property that you can rent out, you're talking thousands of dollars + decent credit for getting a mortgage on the property.
samlevine 9y ago
The same way the Germans do, they save money. Rising housing prices have played out the same across the Anglophone world. It's not sustainable as a means to get the lower classes into the middle class, because the higher prices rise the more debt they need to take on to join the game. Housing is something people consume. It's durable, but so are cars and imagining them as being a gateway investment to the middle class because they will cost more in the future should be just as silly as for housing.
- Armisael16 9y ago
  The house itself normally isn't appreciating; it's the land that does. People don't consume land (usually).
- pm90 9y ago
  Yeah the whole housing structure in the US seems to be geared towards creating a ton of wealth for the real estate business. Which isn't the worse thing; but lets not confuse ourselves that it is a legitimate way to build wealth (it is somewhat so; but you can usually get better returns from other financial instruments over the long haul).
- aphextron 9y ago
  >Housing is something people consume. It's durable, but so are cars and imagining them as being a gateway investment to the middle class because they will cost more in the future should be just as silly as for housing. But when you're talking a capitalization period on the order of the average person's lifespan, it becomes a new class of asset in my mind. You can't treat something which will pretty much guaranteed always exist until the day you die the same as a usable good.

zeth___ 9y ago

I live an an extremely dense city. Prices are not dropping even when thousands of units are hitting the market every month. The reason is because foreign buyers like to park their money out of their country so it won't get confiscated. When there are multiple real estate agents all of whose promotional material is in Chinese in an English speaking country you have to be willfully blind not to see cause and effect.

jseliger 9y ago
Prices are not dropping even when thousands of units are hitting the market every month. The reason is because foreign buyers like to park their money out of their country so it won't get confiscated. [Citation needed] And, furthermore, exporting housing services is a huge, underrated opportunity: http://www.slate.com/blogs/moneybox/2013/05/19/exporting_housing_services_a_huge_economic_opportunity.html http://www.slate.com/blogs/moneybox/2013/05/19/exporting_hou... . We should be doing a lot more of it.
- zeth___ 9y ago
  Citation on what? The price not dropping? The supply of units increasing? I can't give you a citation on who is buying the units because that is obfuscated by design. If the people trying to hide their wealth put their names on the deeds they have just made sure they stay alive in the dungeon until the sale was finalized.
  - msie 9y ago
    > I can't give you a citation on who is buying the units because that is obfuscated by design. So all you have is a gut feeling. Thousands of units hitting the market each month is a LOT.
    - zeth___ 9y ago
      >So all you have is a gut feeling. Seeing three separate real estate agents having nothing but Chinese brochures in their offices tells me they aren't expecting locals to be buying from them. >Thousands of units hitting the market each month is a LOT. http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0 http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0 This has been going on for close to 10 years now.