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The sure-fire way to save America’s cities? Do what Tokyo does.

Eliza Relman   

The sure-fire way to save America’s cities? Do what Tokyo does.

Cities across the US are flailing under a worsening housing affordability crisis. Superstar metropolises from Los Angeles to Miami are becoming playgrounds for the elite. Americans fleeing New York and San Francisco for more affordable lives in the Sunbelt are experiencing sticker shock. The median home price in the US has jumped 52% just since January 2020.

But affordability isn't an issue in the world's biggest city, Tokyo. Despite facing many of the same pressures of scarce land and a growing population, the city of 14 million builds much more housing — and much more quickly — than US cities do. Since the 1960s, Tokyo has tripled its housing supply, while New York's has grown by only about a third. And because housing is far more abundant in Japan's capital, it's also cheaper. The median Japanese tenant spends about 20% of their disposable income on rent (in America it's 30%). Rent for a studio or one-bedroom apartment in Tokyo, which Americans are fawning over as "the new Paris," is a quarter of what it is in New York.

In September, when New York City Mayor Eric Adams unveiled his plan to build 100,000 new homes, he pointed enviously to Tokyo's ability to keep "housing costs down by increasing the supply of housing." "How are we allowing Tokyo to do things better than us?" he asked.

Housing advocates across America are starting to ask the same question. Part of the answer is that build-happy Tokyo isn't in control of its own housing policies. And most of what happens in Tokyo would be illegal in America.

Simple and centralized zoning

So what's Tokyo's secret? Experts say it mostly comes down to liberal and centralized land-use policies, shaped over decades, that give developers a lot of power to build what they want, when they want.

Thirty percent of homes in Japan's urban areas were destroyed in World War II. As the country attempted to rapidly rebuild itself, families started to grow and a large portion of the population migrated from rural areas to Tokyo and a few other major cities for better jobs, exacerbating an already severe housing shortage. So the federal government stepped in, set a simple and permissive set of zoning and land-use laws, and built thousands of public housing complexes, known as danchi, largely in the Tokyo suburbs. The government also introduced housing finance, offering homebuyers long-term fixed-rate mortgages. Decades later, when the housing bubble of the 1980s popped and flattened Japan's economy, the government deregulated its housing policies even further.

What really sets Japanese housing policy apart from other advanced democracies is "the extreme concentration of decision-making at the national level," Alan Durning, executive director of the pro-housing non-profit Sightline Institute, told me.

In the US, city councils make much of our housing policy. This gives immense power to existing residents, mostly homeowners, who vote in council elections and show up to community meetings to determine what gets built. Between the endless bickering, hyperlocal zoning regulations, historic preservation laws, and environmental reviews, much proposed new housing development gets dragged out or outright killed.

"Japan is the exact opposite," said Durning. In collectivist Japan, housing policy is designed to benefit the most people possible. When national authorities make the decisions, "the broader community's interest in having an abundance of housing outweighs the opposition of neighbors," Durning said. If neighbors complain about a new apartment building going up on their block, tough luck. "Local government officials will say, 'Oh, I cannot do anything for you,'" said Jiro Yoshida, a business professor at Pennsylvania State University. In Japan, NIMBYism can't exist. Centralized zoning leads to more inclusive outcomes, while handing power to local interests tends to worsen inequity.

Where the US has tens of thousands of different zoning systems across the country, Japan has 12. (Granted, Japan is geographically about the size of Montana, but it also has nearly 40% of the US population.) For most of those dozen, there are very few restrictions on mixing commercial and residential construction. "It's much more typical to see a 10-story apartment building with small studio apartments, and then a two-story house, and then a small commercial building with a restaurant or a grocery store right next to each other," says Jenny Schuetz, an expert in urban economics and housing policy at the Brookings Institution.

When Yoshida moved from Tokyo to the US, he said he was shocked to discover the existence of two species never before spotted in Japan: land-use attorneys and permit expeditors. We have a whole ecosystem of professionals who make a living helping property owners navigate byzantine regulations, from real-estate attorneys to construction consultants. "That means that there's a lot of negotiation, and discretion, and uncertainty around the building permits and development entitlement" process, he said.

Americans have a term for the types of buildings that fall between single-family homes and high-rise apartments — "missing middle housing." This term doesn't exist in Japan, because middle housing is far from missing. It's abundant, largely because it's legal and much cheaper and more efficient to build. The more builders construct the same type of structure, the faster and cheaper they can do it. Standardized zoning for multi-family housing would make building it much cheaper in the US, Schuetz said. The longer a developer spends tied up in regulatory processes, the higher the eventual project costs are. "The type of housing that's cheapest and fastest to build in the US are single-family detached homes in subdivisions, because builders reproduce exactly the same house thousands of times," she added. It helps that most Tokyo residents don't own cars, so parking doesn't inflate the price of housing as much as it does in the US.

André Sorensen, a professor of geography at the University of Toronto, argues there's a "more important factor" in housing affordability than flexible zoning laws: An aging and shrinking population countrywide. As a result, there are about 10 million vacant homes across the country. With Tokyo's comprehensive mass transit, vacant homes in the suburbs offer Tokyo workers cheaper housing options just outside the city, says Sorensen. "If there's a lot of abandoned housing in the suburbs, then that's going to also restrain upward pressure on prices in the center."

Earthquakes and small homes

Another feature of the Japanese housing market is purely situational: The country is a hotspot for earthquakes. After major seismic events, Japan updates its national building codes. Because these codes apply to virtually all buildings, older buildings quickly become non-compliant and unattractive to renters and buyers who want to live in safe homes. In America, the average age of a demolished building is 67 years, Yoshida found. In Japan, it's 32. The average home is significantly younger than the average Japanese resident. More demolition means more construction. "In any 100 year period, you have a lot more opportunities to replace a building with something much bigger," Durning said.

In America, the average age of a demolished building is 67 years. In Japan, it's 32.

Perhaps because of its history of earthquakes and fires, there's a much broader acceptance of the impermanence of buildings. "There's not a premium associated with older housing," said Nolan Gray, a city planner and research director for California YIMBY. In fact, older homes are referred to as "used" housing. While pre-war apartments in New York are coveted for their history and unique details, pre-war homes in Japan are largely considered unsafe and undesirable. Even the country's holiest structure — the Ise-Jingu Shinto shrine — is demolished and rebuilt every 20 years.

Impermanence also means that most homes depreciate in value quickly. Japanese homeowners largely don't rely on selling their homes to fund their retirement the way Americans do. Loose zoning, abundant supply, and low housing costs aren't as in tension with Japanese homeowners' interests. As Durning notes, "The problem with housing policy in the United States is that it's not actually about housing, it's about real estate investment."

Different cultural norms and preferences also set Japanese housing apart. Americans tend to like living in much larger spaces. Or, at least, that's what the market provides. In Tokyo, there are more than a million small studios and even micro-apartments under 100 square feet.

Could the US import Japanese housing policy?

American policymakers don't often look to learn from other countries. "The US is sort of famously insular in its political discourse," Durning says. "You can call it American exceptionalism or you can call it blindness of the imperial state."

When they do look abroad, urban planners have traditionally relied on European examples. But many European cities aren't facing the same pressures of a fast-growing population and dynamic economy that American cities are. Vienna, which has a social housing system many Democrats celebrate as a model, isn't facing rapid population growth.

But Durning says that's starting to change. As the US housing crisis has intensified, a few prominent experts, including Yoshida and Durning, have elevated Japan's approach to building. Japan's housing policy "is now quite well understood" among American housing advocates and scholars, he says, "whereas it was not even three years ago." Gray thinks there's some combination of policies and design from around the world that would create the most liveable and inclusive cities. "The best city combines Amsterdam public realm design with Tokyo-style land-use flexibility," he says.

"Most American consumers probably wouldn't want to live in the studio or one-bedroom apartments that Japanese people just sort of take for granted," Schuetz said. But, she added, we shouldn't have many of the minimum size regulations we have. Instead, we should let consumers decide what tradeoffs they're willing to make. "Allow the market to build stuff, and the market will figure out what people are willing to pay for," she says.

City planners and housing researchers also say the US could move towards the Japanese model of centralized and non-restrictive zoning. Some states already have. California, Oregon, Washington, and Montana are "backing their way into a statewide system of zoning" by passing a slew of state-wide housing reforms, including legalizing denser and more mixed-use neighborhoods, Gray noted. "We're kind of accidentally building a Japanese-style zoning system here."

Eliza Relman is a policy correspondent focused on housing, transportation, and infrastructure on Insider's economy team.