Tokyo’s Affordable Housing Strategy: Build, Build, Build

To accomodate more people, the city builds more housing.

Scott Beyer | August 7, 2018 | |
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For urbanites living in America’s most expensive cities, it must seem like there’s no solution to the affordable housing crisis. They look around and see numerous construction cranes, only to discover that these new units are, like much of the existing stock, beyond their price range. This, however, amounts to an anecdotal observation on their part. It may seem like there is a lot of construction in destination cities such as New York, San Francisco and Los Angeles. But these cities still aren’t building to the pace of their population growth. To achieve price reductions, these cities would need to implement an open market, deregulating land so that housing supply can meet demand. Assuming that urbanites view this as some crackpot right-wing solution – ‘Reaganomics’, according to one San Francisco politician – they should look at Tokyo, where it’s actually being tried.

Consider a recent Financial Times article about the 13.6-million-person Japanese capital. Like so many other global first-world cities, Tokyo is experiencing explosive population growth, increasing by 1.6 million people since 2000. And unlike practically every U.S. city, it has almost no empty land. So it has responded through vertical growth, tearing down old structures and replacing them with high rises at a pace light-years ahead of anywhere in modern America. As FT’s Tokyo bureau chief Robin Harding wrote in the article, the city had 142,417 housing starts in 2014, which was “more than the 83,657 housing permits issued in the state of California (population 38.7m), or the 137,010 houses started in the entire country of England (population 54.3m).” Compare this, also, with the roughly 20,000 new residential units approved annually in New York City, the 23,500 units started in Los Angeles County, and the measly 5,000 homes constructed in 2015 throughout the entire Bay Area.

This has stabilized Tokyo’s housing prices, wrote Harding, and has kept them far lower than in many U.S. cities.

In Minato ward — a desirable 20 sq km slice of central Tokyo — the population is up 66 per cent over the past 20 years, from 145,000 to 241,000, an increase of about 100,000 residents. In the 121 sq km of San Francisco, the population grew by about the same number over 20 years, from 746,000 to 865,000 — a rise of 16 per cent. Yet whereas the price of a home in San Francisco and London has increased 231 per cent and 441 per cent respectively, Minato ward has absorbed its population boom with price rises of just 45 per cent.

And this is for a particularly popular part of Tokyo. According to the website RealEstate.co.jp, average housing prices throughout Greater Tokyo have actually decreased since 2006. In 2014, the average price of second-hand condos was 27,890,000 yen, or about $232,914. This is above the U.S. median of $187,000, but is a steal when considering that average housing prices in many destination U.S. cities are triple or quadruple this amount.

The question, then, is not whether fast-growing cities can build their way into affordability; the data from Tokyo shows that they can. The question is–what is so different about Tokyo’s political situation that all this construction gets approved, while getting delayed or squelched in U.S. cities. Here, again, Tokyo provides an interesting case study.

In the 1980s, Japanese cities were experiencing the same inflated housing bubbles that U.S. cities are today. Their planning methods, moreover, were rooted in Western notions about separating uses and limiting density. The federal government recognized that these regulations were the problem, so in 2002, it passed the Urban Renaissance Law. The law stripped municipalities of the ability to control private property. As a result, owners can build a variety of uses on their land, regardless of resistance from local bureaucrats or neighbors.

“If you want to build a mock-Gothic castle faced in pink seashells,” writes Harding, “that is your business.”

Of course, this aesthetic point might disturb some people in the United States. One common argument that NIMBYs make against new development is not only that it will increase crime, strain social services, and raise housing prices, but that it will harm “neighborhood character.” If people can just build anything on their property, the thinking goes, they will build something ugly, diminishing the very appeal that makes these cities so lucrative and livable.

But as I’ve noted for this publication, the American cities that are considered by these same so-called urbanists to be the most desirable – such as New York, San Francisco, Boston, New Orleans and Chicago – were mostly built during an era of laissez-faire land-use policy, before the implementation of zoning laws. This meant they developed spontaneous urban patterns that were dense, diverse, complex, walkable, and in many cases, charming. According to Harding, this unregulated strategy is producing the same effect in Tokyo.

If you block from your vision whatever stands next door, Tokyo fizzes with invention and beauty. It is no coincidence that the country where architects can build has produced a procession of Pritzker prize winners. Japanese urbanism, with its “scramble” pedestrian crossings, its narrow streets, its dense population and its superb public transport is looked to as a model.

It should be viewed, for this same reason, as a model for how dense cities can maintain affordable housing. In the U.S., this won’t be accomplished by pointing to a handful of new construction projects and declaring that your city already has too much scaffolding. It will be accomplished, like in Tokyo, by allowing rapid construction rates to meet the enormous population demands.

[This article was originally published by Forbes.]

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