Most of us are unaware that over 13.8 percent – or 9 million – of Japan’s residential properties are vacant.  At three people per household, that’s enough for Australia’s entire population.   There are so many homes in Japan that haven’t been lived in or been hooked up to utilities for at least a year that they’ve got their own name:  akiya (空き家).

How did things get so bad?  Well, as Japan urbanized and became a post-industrial economy, land use, tax and financial policies put in the place after the war were not updated.  Like the rest of the developed world, birth rates dropped, the country got older.  Unlike America, Japan has always opposed immigration and didn’t let many foreigners in.   People moved from rural hometowns and established their own homes in the city, leaving almost no demand for family homes when parents passed away.

But there is more to akiya than just changing lifestyles.  In 2023, Japan had 65.1 million houses but only 54.45 million households.  Much of the older housing stock in the countryside was built for large, multi-generational families, while most of today’s Japan lives in cities as couples or alone.  Traditional houses require continuous maintenance that used to be easy for rural homeowners but about which urban dwellers know nothing.  They have limited amenities and are hard to keep warm which does not appeal to office workers.

History and government policy also play a big role.  Japanese industrialization and urbanization started way back with 1868’s Meiji Restoration and the government has actively encouraged a shift away from agriculture for over 150 years.  Property taxes, banking rules, and land-use regulations have all been designed to create a strict differentiation between urban and rural, industry and agriculture.

Since the 1960s mortgage, tax and permitting regulations have strongly encouraged new construction.  The government still permitted 980,000 new homes in 2019.  Government policy has created such a strong societal preference for new over existing that in 2019, 980,000 new homes were permitted while only 170,000 existing homes were sold.  It’s as if the people worried about vacant properties are living in a different world than those regulating mortgages, leaving the problems they create to someone else entirely to worry about.

And it is not only national policy that contributes to akiya.  Complicated local rules intentionally make redevelopment and demolition slow and expensive.  Inheritors of family homes consistently find that, due to higher taxes on vacant land than on vacant buildings, it is cheaper and easier to simply walk away.  The system penalizes reuse, killing demand and unintentionally creating neighborhoods of vacant buildings even near the Tokyo city limits.

If this is not a perfect example of unintended consequences, I don’t know what is.

Policy helps shape societal preferences. Policies that fail to keep up with changing realities like demographic shift create unintended outcomes.  While America lacks sufficient housing rather than too much, we suffer from our own underlying mismatch between policy and reality.

The National Association of Housing and Redevelopment Officials (NAHRO) recently reported that around 75 percent of land in American cities is zoned for single-family homes. Closer to home, the National Zoning Atlas finds that of the 76% of land in Massachusetts that is subject to zoning, 86% of that is restricted to residential uses.  And of what is zoned residential, a full 96% of is restricted to single-family use.

That means of the 4,740,040 acres in the Commonwealth, only 93,000 acres – or about 2% – allows multifamily housing of 4 or more units as-of-right.  That seems at odds with our housing stock, where 11.4% of it exists in 3- and 4-unit buildings.

And while 93,000 acres may seem to some like a lot of land, the buildable amount is much smaller.  Much of those acres already has buildings on it, or has environmental restrictions, or lacks utilities, or is unbuildable due to steep slopes, ledge, etc.

Using the National Zoning Atlas, which I highly recommend, you find that this is not just a Massachusetts problem.  The same calculation for Connecticut yields only 37,500 acres zoned for 4-plus units (1.3%).  And even though Arizona’s gross buildable area of 850,000 acres is much bigger than ours, it still only represents 13% of the whole state.

We, the people, are not who we used to be and do not live the way our predecessors did.  The 2020 Census showed that 56% of Massachusetts residents live in 1 and 2 person households.  America’s average household size has shrunk in every census since the end of World War II.  It’s not a matter of good or bad – it’s what is.

It is not just zoning that is out of synch.  Housing finance, building codes, permitting, taxes, incentives, and many other regulations are out of date and will continue to negatively impact housing production until we accept who we are becoming and create a coherent approach to the housing ecosystem.

Crafting policy in siloes is what Japan did.  Look at where it got them.

Please send any reactions, comments, or ideas to Scott at [email protected].