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> The land is seemingly worth nothing and the building itself worth zero or really a liability This doesn't make any sense to me. What economic mechanisms caus

> The land is seemingly worth nothing and the building itself worth zero or really a liability This doesn't make any sense to me. What economic mechanisms cause it to be true? > Japanese houses, unlike those in the rest of the world, supposedly depreciate to $0 in just 25 years Same for this. I've never heard of either of these being true; do you have a link?

bhickey 5y ago
https://www.economist.com/finance-and-economics/2018/03/15/why-japanese-houses-have-such-limited-lifespans https://www.economist.com/finance-and-economics/2018/03/15/w...
- ryanSrich 5y ago
  https://archive.is/5eFO6 https://archive.is/5eFO6
- brundolf 5y ago
  Huh, that's fascinating
gruez 5y ago
first result for "japanese house depreciation": https://www.theguardian.com/cities/2017/nov/16/japan-reusable-housing-revolution https://www.theguardian.com/cities/2017/nov/16/japan-reusabl... >Unlike in other countries, Japanese homes gradually depreciate over time, becoming completely valueless within 20 or 30 years.
- tpmx 5y ago
  This scrap-and-build approach is a quirk of the Japanese housing market that can be explained variously by low-quality construction to quickly meet demand after the second world war, repeated building code revisions to improve earthquake resilience and a cycle of poor maintenance due to the lack of any incentive to make homes marketable for resale.
  - masklinn 5y ago
    Also high summer humidity which basically gives the choice between extensive maintenance requirements (which requires that the house was built to allow for it) or… just tearing down the house before it's gotten to rot. I also expect the situation is different in Hokkaido: it's drier with lots of winter precipitation (spring is the driest season in sapporo versus winter for tokyo), and the more extreme winter weather probably leads to higher quality construction (for instance central heating and extensive insulation is common in hokkaido while it's quite rare on honshu which tends to go by "tactical heating" and quite drafty houses).
Shadonototro 5y ago
well, if they sell the houses for $500, it is because that statement is true, over time, they worth nothing because nobody wants to live in the country side, what you buy for $500 is worth $500
trophycase 5y ago
Lots of houses are liabilities. If you've ever been to a place like detroit, where they are abandoned, the roofs are half collapsed, there is water damage everywhere, etc. The cost to repair is higher than destroying it and building something new.
lazide 5y ago
Some good peer links. There are several ways to value things - economic value (how much money it produces or how much money it saves by having it), both current and projected/speculative. - emotional value (this is my grandfathers house, I wouldn’t part with it for anything)! Or FOMO, or ‘being established’. How much is it worth to feel that way? - scarcity value. You need x or something terrible will happen, it’s in a bidding war, how much can you spend to win? This can also be current or projected. The signal you’re seeing is that for people eligible to buy the property, it is near zero value on all these axis.

bhickey 5y ago

https://www.economist.com/finance-and-economics/2018/03/15/why-japanese-houses-have-such-limited-lifespans https://www.economist.com/finance-and-economics/2018/03/15/w...

ryanSrich 5y ago
https://archive.is/5eFO6 https://archive.is/5eFO6
brundolf 5y ago
Huh, that's fascinating

gruez 5y ago

first result for "japanese house depreciation": https://www.theguardian.com/cities/2017/nov/16/japan-reusable-housing-revolution https://www.theguardian.com/cities/2017/nov/16/japan-reusabl... >Unlike in other countries, Japanese homes gradually depreciate over time, becoming completely valueless within 20 or 30 years.

tpmx 5y ago
This scrap-and-build approach is a quirk of the Japanese housing market that can be explained variously by low-quality construction to quickly meet demand after the second world war, repeated building code revisions to improve earthquake resilience and a cycle of poor maintenance due to the lack of any incentive to make homes marketable for resale.
- masklinn 5y ago
  Also high summer humidity which basically gives the choice between extensive maintenance requirements (which requires that the house was built to allow for it) or… just tearing down the house before it's gotten to rot. I also expect the situation is different in Hokkaido: it's drier with lots of winter precipitation (spring is the driest season in sapporo versus winter for tokyo), and the more extreme winter weather probably leads to higher quality construction (for instance central heating and extensive insulation is common in hokkaido while it's quite rare on honshu which tends to go by "tactical heating" and quite drafty houses).

Shadonototro 5y ago

well, if they sell the houses for $500, it is because that statement is true, over time, they worth nothing because nobody wants to live in the country side, what you buy for $500 is worth $500

trophycase 5y ago

Lots of houses are liabilities. If you've ever been to a place like detroit, where they are abandoned, the roofs are half collapsed, there is water damage everywhere, etc. The cost to repair is higher than destroying it and building something new.

lazide 5y ago

Some good peer links. There are several ways to value things - economic value (how much money it produces or how much money it saves by having it), both current and projected/speculative. - emotional value (this is my grandfathers house, I wouldn’t part with it for anything)! Or FOMO, or ‘being established’. How much is it worth to feel that way? - scarcity value. You need x or something terrible will happen, it’s in a bidding war, how much can you spend to win? This can also be current or projected. The signal you’re seeing is that for people eligible to buy the property, it is near zero value on all these axis.