I went to Tokyo this year and was shocked at how cheap it was compared to major North American cities. Meals like ramen were $8.00 USD including tax and tip. Asked some young people how much rent was in Tokyo, "very expensive, young people need their parents help... $1,000 USD per month". Sums it up there, much cheaper than the US and Canada but salaries are so low it's expensive for them. My take away is that Japan has a rep for being super expensive when in fact it's now very cheap for North Americans.
It's only cheap if you come to Japan for holidays, or if you're an expat detached by your company to Japan.
If you're living in the country, receiving the same salary as any Japanese person, Tokyo is an expensive city. And I'm not even talking about language teachers, who cannot really live in Tokyo or all the Japanese people who are part-timers
Everywhere in the world salaries, rents and prices go hand in hand. Unless you're living on one side of a border and working on the other side (which is possible in EU) which allow you to game the system, rents and prices are based on supply and demand. Don't take it personally, but it does not make much sense to compare what you would get with a salary from one country while living in another country.
Yeah salaries are pretty low in Tokyo for a lot of jobs, if you're on the lower end of the skill hierarchy you're going to be in pain.
But ... it's not like low-skilled workers in SF are getting paid much either.
The average HN reader might be in a better negotiating position w.r.t. salaries in Tokyo
Some things to consider about Tokyo:
- No need for a car, insurance that comes with
- Your company will (in almost all cases) be paying for your daily transportation by car
- If you're willing to suffer in the morning with travel/take a bus to the train station, you have a range of prices for renting
- There are a lot of people living on low salaries, so there are a lot of services on the low end. 100 yen shops with high quality stuff, all things considered.
For 60,000 yen/month you can get 20m2 studio appartments (25-year-old buildings) within 15 minutes of stations like Nippori or Otsuka. If you follow the "1/3rd of salary" rule, it's reasonable if you're making a bit over minimum wage (not sure what the going rate for English teachers are)
that contrasts with the reality that the average commute time in tokyo is 66 minutes (2011). I suspect the median is probably longer then that.
SF is cherry picked, the most expensive place in the US. I live in Philadelphia and the commute time and cost is substantially lower. NYC would be the most appropriate comparison, and they get to work with nearly 20 minutes less commute.
I bring up commute because many people have long commutes because they simply cant afford to live closer.
> I suspect the median is probably longer then that.
Generally when the median is greater than the mean, it's because there's a long tail to the left dragging the mean down. I expect that the opposite is true: there is a long tail to the right, with a small number of people who have exceptionally long commutes.
So I'd expect the median to be lower, like it is for salaries.
Tokyo's rent is comparable to Dallas or Madison, WI (give or take some square footage because American housing is less efficient in space usage). Way cheaper than NYC for sure.
There are a lot of people who do 90 minute+ commutes for sure. Even for relatively small commutes you end up with a fixed cost of about 20 minutes for just going to the station from your home or leaving to go to the office, so 30 minutes is good.
It's possible to live close to your office if you're willing to live far from trains a lot of the time though. Living 20 minutes from any station instead of 5 easily cuts 30% off the rent
People ride scooters all over the place in Japanese cities. They're pretty commonly used for delivery services as well. Biking culture is actually more aggressive than in many places in the US. For example, it's for some reason acceptable to ride your bike on crowded sidewalks, belying everything I understand about notions of Japanese civility.
Not really my experience. I've seen people trying to ride bikes in areas where people could barely walk. And I've been on many sidewalks where not watching your six when moving right or left was an invitation to get run over on a sidewalk.
Electric bikes are making headway but many employers have rules specifically forbidding employees from riding them (or any other form of personal transportation) to work. There is a major national insurance company with which employers have a contract and that company won't pay out for accidents that happen on the way to or from work while the employee is on a bicycle or in their own car, so employers ban commuting by bicycle or car.
Ah no worries. Give SF 30 years of declining revenue for all it's industries (like Japan), with several financial disasters during that time, and SF will not be expensive anymore either. Living within 66 minutes commute to SF will be positively easy.
This is why I'm not buying a house in the Bay Area. I look at these properties on the market for $1.5m for a run-down house in the bad part of town just because it's "only" 15 miles from SF and I think that there's no way this is going up in value forever.
Good weather, nice charm, isn't that why everyone wants to live there anyways? It's like how California is just is crowded so no one goes there anymore.
I assert that you can find an apartment considered appropriate for a middle-class person in Tokyo for approximately $800~$1,200 in virtually any district of the city in under one day of looking. This is not true of Manhattan or San Francisco.
If you strongly believe this is unlikely, name a neighborhood and I'll show you three apartment listings.
If you want a 1K ~ 2DK [1] for 1 ~ 3 people I think you are right.
For larger families? I dunno. We're a family of 5 (1 in jr high, 2 in elementary) and really struggling to find a place to move up into from our current 2LDK. :(
I admit, we have a bunch of constraints, but I don't think they are too unusual. (want to be reasonably near to work, school, and in-laws)
[1] For those that don't know, apartments here are typically listed by number of rooms, plus if the space includes an "L" living room, "D" dining area, "K" kitchen. So "1K" would be a single room with a place to cook. 2DK would be 2 rooms, with an eating area and a kitchen.
>If you strongly believe this is unlikely, name a neighborhood and I'll show you three apartment listings.
I don't believe it is unlikely but I'd like to take you up on your services. ;)
Got anything for the Harajuku or Akihabara districts? You seem to be more knowledgeable on how/where to search for this info and I'm a bit lost. (Still have over a year to properly research this stuff on my own, but I really want to move to near one of those two districts next year.)
Even in Shibuya? That's interesting, because depending on the size of the apartment you consider middle-class, this would make it cheaper than Paris. Definitely not what I remember from living in Japan 10 years ago.
For folks who don't have the local color here: if you're willing to live in apartments sized for middle class Japanese folks, and that is a big if for many foreigners, Tokyo can be impressively inexpensive to live in. Shibuya is a very desirable and relatively centrally located neighborhood; think "SOMA" or, hmm, I don't know Manhattan that well but somewhere in Midtown maybe?
(If you optimize for commute down to the minute, prestige of building, or living space, you can end up paying a lot of money. Though even in an apartment that scores well on all three my rent is less than the median in SF.)
Ya generally speaking a new grad programmer is doing great if he/she makes $50k/yr.
Engineers that'd get $300k comp offers from big5 tech here would make $80k--$150k, provided you go to a web/mobile company. If you go to an older industry you will make less.
You can hit $300K (All-in) as a senior engineer at Google.
Various finance firms on the east coast can also send recruiting e-mails, touting their >400K comp. I think the key to that one is having work experience in an investment bank, as well as at AMAPGOFA.
For all it was, Friends did spell out some Manhattan realities. The main set, the girl's apartment, was an illegal sublet of an older relative and therefore subject to rent control. Even characters in decent jobs shared apartments. Several had wealthy parents who lived outside the city. A couple of the female characters made no bones about how they wanted to date/marry rich men, often significantly older men. And I got a kick out of the story arch where the Chandler character, despite a reasonable job history and a degree, had to work as an unpaid intern. The visual dimensions were certainly a total fiction, but I got the impression that some of the writing staff wrote what they knew.
That bit with the hanukkah armadillo and superman is still one of the funniest things I've seen on TV.
But would they still be so thrilled on a Tokyo salary? People here (I live and work in Tokyo) have a much narrower pay band than you would see in NYC or any American city. You might make $25~30k to start, and $40~50k at age 40.
I'd love to move back to my native NYC, but I've been priced out forever, as the cliche goes. There are entry level people earning more than I earn as an 18-year veteran in Tokyo.
Everywhere in the world salaries, rents and prices go hand in hand.
Not true. There's huge variations in OECD countries. Here's a graph showing house price to income ratio. I know this intimately because I live on the far left :'(
That's a rather weird graph - it doesn't show house price to income ratio at all, even though that's its title. It shows change in that ratio since 2010. Tells you essentially nothing about the actual house price to income ratio.
> Everywhere in the world salaries, rents and prices go hand in hand
Check r/London and look for topics like "how much of your salary are you paying on your rent?". I've seen a lot of people spending 50% up to 70% of their salary on rent.
I pay 50%, used to be 35% before I went full time and shifted part of my salary to an end-of-year bonus.
It will move up to close to 70% if my roommate moves out in August. It's a little shocking to consider that I would actually consider paying that much to stay here. I seem to really like Midtown Atlanta that much.
Once you get used to it, it's not that bad. Out of all the things you could spend your money on, having an utterly sweet pad in the dead middle of town isn't the worst thing.
I recently started a full time job after getting recruited to a company in Tokyo, the wages are pretty damned good, and the cost of living is very low. By comparison I've worked in Sydney where the wages were comparable, potentially a little higher (less than 10%), and the cost of living was about three to four times higher. And done the digital nomad thing where cost of living was slightly cheaper still than Tokyo, but not by a lot, and average income was (variable, admittedly, but generally speaking) enormously smaller.
It does appear to be an optimal combination for both good wages and low cost of living in my experience having traveled
and lived extensively all over the world.
The single caveat I'd make on saying this is that the way that I prefer to live might be uniquely suited to Tokyo, and uniquely unsuited to Sydney. That being; I hate commuting, I want somewhere small and comfortable but otherwise as cheap as possible to live, but as close to work as possible so I can just walk to and from every day. In Sydney working in the CBD this means you'll be stuck with some status signalling lifestyle apartment coupled with the already significant premium on rentals in general which is applicable to all Sydney real estate, and it's stupidly expensive (average 2250 - 2500. You could probably get away with a rundown roach palace for a little cheaper, but the floor on Sydney rentals in my experience is just absurdly high.
By comparison I got a no frills apartment that is perfectly useful, comfortable and serviceable within 300 meters walk to my office in Shibuya no problem at all, 1100 USD per month, and everything else on top of that with the bountiful microwave dinners, amazon, and roadside eating joints by the dozen, extremely fast and cheap internet (gigabit for < 40 USD pm) doesn't increase the price by much at all.
I'm curious to find out more about looking for and getting a tech job in Japan, as well as the overall working environment.
Did you look at specific jobsites? Do you speak Japanese? Are tech companies in Japan similar in culture to your usual stereotypical long hours salaryman jobs in mainstream corporate Japan?
Regarding jobsites, no, I was contacted on LinkedIn for a specialised project that I happened to be uniquely suited for. I was not in the country at the time, and my employer handled immigration and the relocation and everything associated on my behalf.
I did not speak any Japanese at all at the time I started, and I am slowly learning it now but don't have a lot of time to dedicate to the project. I intend to gain fluency in it eventually. Unlike many of the places in the world I've lived, I would say if you intend to comfortably exist here long term, you will need to learn the language both spoken and written. It's not like a lot of places these days where English is almost an official second language or there's extensive proficiency amongst the local population.
This is my first and only time working in Japan so I have no basis for comparison to other companies here. My impression of the culture is there can be an overemphasis on hours worked rather than output produced and the quality thereof, but they're conscious that is an issue at least where I work and they're mindful of it and try to address it. They also have things that seem strange to me as a foreigner but I am more prone to just accepting and trying to do things their way (when in rome).
All in all, I'm finding it pretty good, it definitely helps that this particular field has pretty much devoured all my energy, life and thinking since I really immersed myself in it a few years ago, so working in a global hub central location where it's really having an explosive impact on a core related piece of infrastructure is pretty much a dream job for me.
> Meals like ramen were $8.00 USD including tax and tip
There is no tip in Japan. And 8 USD for Ramen is super expensive, in Kansai you can get ramen for 5 USD or even less. Ramen should not cost that much anyway, it's super fast to make and ingredients are super cheap too.
They are not going to make the broth from scratch separately for each customer, so it's not different from all the different kinds of preparation any restaurant needs to do to ready itself for the day.
It's $20.50 here in Brooklyn at a small neighborhood place (including tax and tip)! Ridiculous. I bought a premium instant ramen on Amazon, add my own meat/egg and it's as good or better.
Ramen in NYC is mostly an exoticized item served at comparatively fancier places than the typically utilitarian presentation you'll find all over Japan. It's no wonder that you can find it at $20+ in Brooklyn.
It's interesting to see how foods become either premium (ala Japanese in the US) or commoditized like Vietnamese or Thai in the US. On the other hand, In Japan Thai or Indian can be premium cuisines.
On the other hand, most of it is presentation and perception. You can get a $5 burger as well as find a $20 burger --if you search hard enough you can find a $5 with the same quality as the $20 version --so it's not always exoticism that does the trick.
Pricing strategies for restaurants are not driven by whole-market perceptions but many combining factors such as local competition, available space, labor and rental costs, hours of available custom, etc.
To put it another way, you can do a high end anything restaurant, but takeaway makes far more sense in a high traffic location with massive rush hours, high rents and little available space, no foot traffic after 5PM and no access after 8PM.
As other commenters have said, its not specific to any cuisine. You can have "premium" any cuisine that you like. The difference seems mostly to be the people starting these businesses. If its easy for people from other countries to get a visa/start a business in the US, that will attract more "premium chefs". But if its not that easy, and the people running the restaurants are first-timers or relatives of immigrants just trying to make money, it would be hard for them to open a "premium restaurant".
I understand some of those aspects -- the curious part is that one cuisine from a third country might be seen as cheap food in an adopting country and premium in another adopting country -generally speaking.
I recently ate at a Chinese restaurant. My Korean roommate took me there with his family and told me that it was run by Korean people. I learned that Chinese food in Korea is fine dining, not the cheap shlock they dish out here.
Enough Korean people have come to Atlanta that there is a restaurant there aimed specifically at giving Koreans a taste of home, that taste involved a completely different cuisine from both American Chinese food and Chinese Chinese food.
Something to be tucked in the back of one's mind is that in France most French eat normal French food --not fine dining French food, some people do take their time to cook somewhat complicated dinners. In China people eat regular Chinese food, not fine dining Chinese food --based mostly on: fried noodles, rice or soup stock. Each will have some kind of meat and wilted veggies --not many people cook at home. It's greasy, it's tasty (in the way salty greasy things are tasty) --but it's not by any means great food. For fine dining they will go to a banquet dinner, or some foreign fare --even tacos are exotic, if you can find them.
I never got the impression that Chinese food is upscale as a Korean. 짜장면 may as well be pizza and hot dogs for Koreans, for example. However, the Chinese cuisine meal I had for well over $300 / head in Choson hotel years ago was certainly nice. 12 year old me still asked for 짜장면 and they brought it over from across the street probably.
It wasn't Golden Buddha I hope? That place is what celebrity chef David Chang probably would charmingly refer to as "bad" Chinese food that is addictive, and it's decided not nice by any stretch of the imagination. As an out of town Atlanta Korean I'm still clueless about what most Koreans know here ITP and what's around Duluth.
Had to go look it up, it was Fung Mei off of Pleasant Hill.
Yes, they absolutely loved the Jajangmyeon. (짜장면 for those curious) I couldn't eat it.
Now that I'm thinking about it, they didn't really describe Chinese food as upscale. But more as like a treat. We're super spoiled here in America with all these different kinds of cuisines.
ITP the best Chinese restaurant IMO is Chong Qing Hot Pot in Chamblee. We had good meals at Northern China Eatery on Buford Highway, but Chong Qing is way better.
I'll edit this with the best Korean restaurant when I can get back with my roomie on where it moved to. -- edit, sorry he doesn't know himself. But the original restaurant we used to go to is called Yet Tuh. The owner got fed up with the small space and moved the staff out to the sticks.
There of course are exceptions to all sorts of things, but generally speaking these things hold. There are also high-end restaurants which serve mexican cuisine, but by and large, most establishments selling Mexican food sell what poor Mexicans understand as fast food in Mexico --but one can also find these to be expensive in far away places like Japan or China where reproductions using more local flavors can go for relatively high prices.
Part of it with Japanese food in the US is that word associates with "sushi" for most Americans and Sushi/Sashimi is decidedly not inexpensive in Japan for the most part. Some of the conveyor belt places are pretty reasonable but a lot of sushi is pricey.
Ramen's becoming more popular now but it seems as if there isn't a lot of demand between 50 cent package of Ramen noodles and $15-20 quality Ramen place.
Uhh what kind of places are you going to? And what kind of ramen did you buy? I consider Shinsengumi to be my minimum acceptable standard for restaurant ramen here in SoCal (I think there's plenty of better places here, but it's still good), and I don't even know how you could prepare instant ramen that was comparable even if you had comparable noodles, since the broth takes hours to prepare.
>and I don't even know how you could prepare instant ramen that was comparable even if you had comparable noodles, since the broth takes hours to prepare.
Well, some people find Olive Garden as good as a high end restaurant in Rome, so for them it's "comparable".
That's my favorite store-bought brand too, but it still pales in comparison to fresh ramen at a good shop.
> Theoretically there's no reason why a quality broth can't be reduced to powder form and used with instant ramen.
I mean .. there really are. There are all sorts of aromatics and fats that can't be properly powderized. Note that, e.g., coffee is way better in fresh form than powder form, as are a huge multitude of foods.
Food doesn't work like that. There are plenty of foods that taste substantially different after sitting for just 15 minutes, let alone packaged and let sit at room temperature for months. Ramen is a very aromatic broth; it will not taste the same after months.
>Theoretically there's no reason why a quality broth can't be reduced to powder form and used with instant ramen.
I think the biggest issue is that dried animal fats will significantly reduce the shelf life.
I've tried a bunch of Nongshim stuff (including that one). I think it's the best instant ramen I've tried (although I've heard there's better stuff available in Asia), but it doesn't compare to the real stuff, even if you add things to it.
That isn't a fair comparison, as there is a massive difference in the quality of hole-in-the-wall ramen in Tokyo and a $2 fast food chain hamburger in the US.
I guess the issue is that fast food in the US is pretty protein-centric, which is fairly expensive for good quality. I'd probably take the hole-in-the-wall ramen personally but I can't think of any typical US "fast food" that lends itself well to inexpensive quality.
Good ramen isn't that cheap or easy to prepare but the time and ingredients required to make the broth can be spread over a lot of servings.
I think you're quibbling. Add ~9% tax and ~18% tip and you're approaching $16 which isn't all that far from $20. Santouka Ramen is a similar price although there are various add-ons that get you up to $20 pretty quickly.
Leaving costs aside for a moment, I am very interested in what both Japanese people and expats consider to be the key differences between good and bad ramen for our startup http://8-food.com/ ... eg. personally I can't stand seafood flavors and get totally sick of that curry one.
In Sydney Australia ramen can be AUD$8-20 which is about USD$6-15. In China it's about 25-60CNY or USD$3.6-9.
Broth is the same differentiator common in Vietnamese pho. About the Chinese, yes I was differentiating... Chinese 拉面 is a broader and different beast. Generally much cheaper in China, eg. easy to find under USD$2-3.
damn that is cheap.
consider their a la carte ranges from 700-1000. I live in germany near freiburg and all michelin star rated restaurants here start at like ~3200 yen per meal.
(well there is prolly an exception an japanese restaurant in freiburg which serves from 600-~3200 yen per meal)
Not sure rent explains everything. Ramen is very high a high volume business, and the additional customers you get in a very dense city like Tokyo should make up for the rent difference.
On a recent trip to Tokyo I was under the same impression about the low rents until I noticed that many apartments are a single room roughly 200-300 square feet in size.
Yes, you can eat cheap ramen. But do you want to eat cheap ramen every day? Most supermarkets in Tokyo are expensive. Want some Zucchini? Pay 200 yen for a tiny one. Want an apple? Pay up to 350 yen for one. Want a beer? Pay 300 yen for 0.3l. Restaurants? Want pizza? Pay 20$. Maybe that's normal in the US, I don't know but in my experience, a pizza is 6$ tops.
Of course, there are things that are cheaper. If you live as Japanese as you can, you can save some money.
But rent prices are very high for a normal Japanese worker. As some people here already said salaries are very low.
Average income per age range[1]:
20s：348万円 (~34k)
30s：458万円 (~45k)
40s：586万円 (~58k)
50s：721万円 (~71k)
My ~55m2 room costs about ~1800$ without electricity etc. Since the owner recently changed for new people the price went up to ~2000$
Given it's a modern 'mansion' (apartment) with nice extras, in a very good location it's still cheap (wondering why every day.)
I heard SF is crazy expensive, but that's a different problem. Most people here, even in IT jobs get about 2000 dollar per month. So where can they live? They can live in some 30 years old very tiny apartment or live outside of Tokyo and drive in 1 hour or more every day.
Even if you live 30 minutes away by train, most trains coming from affordable areas are packed and you have to queue up to get into one, which can extend the commute time to an hour or more[2].
If you want to go to work by car be ready to pay around 300$ per month for a parking space.
Then, say you start a family. 55m2 won't cut it anymore. 80-100m2? Very few places. Very expensive. Most rooms here are between 20-35m2 made for singles.
Anyway, this maybe sounded negative but I love this city. All things considered, it's awesome and comfortable to live here.
None of the facts you listed are untrue, but did you notice how skewed your post is towards western-style living? None of the food you mentioned are everyday items for Japan (except beer, which is still cheap in Tokyo compared to western cities). And you definitely do not need 80–100m² to raise a family; most natives in central Tokyo raise their families in 55m² or less.
You're right, it's crazy how low professional salaries are, but the city is so affordable with such a wide range of housing options that you can be a nail stylist and still live in the most central neighborhoods (granted, that stylist would probably have to move farther out to raise a family).
Yes, I noticed that that's why I said if you live the Japanese way you can save some money. So I am aware.
Maybe I should rephrase that?
The beer is almost 8-10x more expensive compared to where I come from though.
You are right that most people here live and raise kids in smaller apartments. But just because this is the status quo and you don't 'need' more I wouldn't say it's good. Why should your kid have to live in a 5sqm room? I wouldn't be able to justify that for myself and would have to move outside.
I think it's the mentality here, singles, for example, spend most time at work or similar so they don't mind having a tiny, affordable home. Also most Japanese (there are exceptions) normally don't invite many people to their home etc.
So, this is a total anecdote, but I recently moved to Tokyo from SF, and while I don't think it's necessarily more expensive to live here, I wouldn't say it's a bargain by any measure.
My rent is comparable to what I paid in USD in various areas of the SF peninsula. However, move-in costs were outrageous. I have a pet, so that increases it some, but everything here for rent is a multiplier, ie.:
- I had to put 3x monthly rent down up front for security deposits (due to pet, average is 2 months)
- Pay the first two months rent up front
- Pay the real estate agency that helps you find an apartment (pretty much required) one month rent
- Pay a "guarantor" company half a month's rent for some kind of renter's insurance I guess
I'm lucky that I didn't have to pay "key money" for this apartment, which is effectively a bribe to the owner that you'll never see back. I also won't ever see my real estate fee or guarantor money again, and it's common to lose at least 1 month deposit due to "move out cleaning fees" (regardless if you keep the place spotless).
If you know prices in the bay area, paying 6.5X that rent up front is pretty painful, and not being able to recoup 2.5X your rent is also kind of rough.
I'm lucky that my salary didn't shift too much (aside from currency exchange) when I moved here, but generally salaries are much lower across the board in Japan, even Tokyo.
Food is similarly priced here as SF, depending on what you choose to eat. Some meals can be considered cheap (gyudon, ramen, etc) but you have to remember portion sizes tend to be different and meals don't typically include drinks here. It's also really nice that tipping is not part of Japanese culture, since I personally find it adds a lot to the total cost when you eat out a lot (like my fat ass).
Now, to add a huge caveat to all this, you can live cheaper in Tokyo if you choose to. When I moved here, I chose to keep my lifestyle roughly the same (though I didn't buy another car or motorcycle, so there's some savings). First, if you want to live more cheaply, don't bring a pet. You can also downgrade your lifestyle a fair bit which is an interesting difference from SF. In SF, even a small studio can go for a lot of $$$, but here, you can find small studios for $500-$1500USD relatively easily (whether they accept foreigners or not is a different issue).
TL;DR: Can definitely be cheaper depending on what sacrifices you're willing to make. With no sacrifices, about the same as SF, except up front costs.
Not to really counter anything you're saying here but for my current NYC studio (with a cat) I had to give 3.5x the monthly rent the day I signed the lease.
- first month's rent
- security deposit worth a month's rent
- 15% brokers fee
Admittedly, NYC is terrible with its broker stuff but switching over to Tokyo wouldn't have been that dramatic if you were coming from this coast instead.
But like your quote alludes to, the salient metric is internal purchasing power. If job salaries typically make $1000 a month out of reach, what does it matter to affordability unless you get something like remote work at the host country's pay rate?
Housing will always be nasty. Because everyone wants/needs it, and there is only so much land to build on (land that may or may not be needed for other things, like growing food).
Then you toss banks on top and things really spiral out of control.
There is way more land than needed, if only we build cities dense enough. Have a look at e.g. Hong Kong's density: The Kwun Tong district in HK has 57250 persons per square kilometre [1] which, assuming the world is 7*10^9, means we could house them on a mere 122270 m^2 (about 1/5th of Texas).
People are going to be in for a shock when it becomes normal to spend 70% of your gross income on housing (ownership). The amount of things people value these days other than living in an "important" city with jobs is declining. House in a nice neighborhood with good schools, near transportation, cell phone, broadband, Netflix account, food, healthcare. Everything else is "disposable," pun intended.
It would be interesting to look at land value vs. labor requirements to build an additional floor.
In the absence of regulations limiting building height, I think 70% is unlikely to become the norm. Just physically it seems likely that you could add 1000 square feet on top of a building for something that works out to less than 10 years worth of full-time labor. Assuming you amortize that over a 30 year mortgage, that's well under 50%.
I could see a future in which land use regulations drive up the cost of housing to 70% of income. Also a future in which people work half the number of hours they do today and spend 70% of their income on housing, which is less of a nightmare scenario.
There is a point where an additional floor becomes too expensive for the math to ever work out, but it seems to me the population of the Earth would have to more than triple for it to become as bad as you suggest.
It's already common to spend around 50% after taxes.
70% is unlikely considering you still have to pay utilities, bills and food on top. That would leave nothing at the end of the month.
P.S. You'll note that expenses can be a massive percentage of "lower" rents. For instance, a studio in a small city can be $500 a month, as much as the car expenses you need to go to work.
Density. Most Americans and American cities refuse to increase density to the proper levels because there is a "suburbs" culture here. Everyone wants 2 car garage, large lawn etc. Living in an apartment for your entire life is looked down upon, especially if you have a family. We're still in the suburbs mindset as historically space has been extremely abundant.
I'm a young person, and to me it's more of an inequality problem than anything. Only poor people live in apartments, meaning apartment complexes are poverty- and crime-riddled. Either that, or they are so expensive, it would be cheaper to get a house. At least in the suburbs with a mortgage, I am able to build equity.
My experience is in a city that has not been positively affected by globalization. I know the housing market is quite different in the tech hubs of the country.
I think if given the opportunity, most people would move to a place where they have a shorter commute, which is one of the most consistent indicators of life satisfaction, on par with having a happy marriage. The problem is that you can only afford to live in a city if you are poor enough to be subsidized or rich enough to afford to subsidize everyone else. The middle gets cut out.
Even if you can afford to live in the city, most richer people I know move to the suburb for quality of life reasons. Not just for space either. I live in an extremely gentrified neighborhood in one of the most densely populated city in the US. My condo is worth 1.2-1.5 million (I don't live in California nor NYC, so that's quite high here).
Yet even with that, it took 3 police cars to get a dude with a ton of warrant who has been attacking local women to get off from my stairway...for the second time in 2 weeks. We keep having to call out to get drunk homeless people from my parking lot, and crack addicts hide by the door to our storage rooms.
You can pay millions and still deal with that crap. Or you can move a 30 minute drive away and have a fancy house with a yard and instead of drunk people screaming you'll hear your neighbors kids screaming at each other while playing in a pool (which most people like better).
I'm a city person, but it's not hard to figure out why people would not want to deal with the city, and why people in the city quickly become NIMBY.
Now, I hear Japanese cities a somewhat more civilized. It might be a stereotype, but if its true and people can actually respect each other in close quarters, it changes the game completely.
And if there were enough density to cover both rich and poor there would be way less homeless. Many of the homeless even here in Seattle are because they had an apartment but got priced out or lost their jobs.
Maybe there's a way to get the best of both worlds? High density with space? I don't know much about civil engineering, architecture and urban planning but I'm absolutely certain the the current state is just a local minimum, not an optimal solution. I'm pretty sure we could optimize for higher density, shorter commute and larger living spaces if we wanted to.
Oddly enough, Tokyo felt like high density and high space to me. Although my apartment was just one tiny room, I realized I was spending all my waking time outside. My apartment was my bedroom and storage, nothing more. I did most of my living in the city. And Tokyo is HUGE.
(This is in pretty stark contrast to my experiences in America, where I spend most of my waking time at home, even when hanging out with friends.)
When I came to that conclusion, suddenly the density didn't bother me so much. It was a change in mindset rather than actual physical space.
You just need family-size non-luxury apartments to buy (and not rent). The only apartments of that size in any city that I know cost in the millions per unit. That's simply out of reach for your local dentist or pizza shop owner with a wife and 3 kids.
Out of reach for your local dentist? Huh? Dentists make more than most people here, $159k/yr average[1]. Software developers make a little over half that on average, depending on which sub occupation they work in. [2].
Dentists already have a mortgage sized student loan payment to make.
People also confuse revenue with profit. My coworker's OB/GYN has great revenue, but her insurance costs are amazing, almost as much as my salary.
From memory of my kids birth the hospital direct bills expensive equipment, certainly my buddies wife did not personally fund the construction of the birthing center room, however if my dentist wants a new x-ray or new chair AFAIK its literally cash out of his checking account.
Its comparing apples and oranges. Much like comparing U3 employment stats in an employee culture like the USA where as in Japan I understand they hire once a year for new grads and if you don't make it into a real job at a real company (and very many don't) its a lifetime of either NEET or temp work, so their concept of U3 means very little compared to our concept of U3. Their concept of U3 is kind of like our concept of U3 of military service academy recent officer graduates.
I on the other hand would never want to live downtown. I like the suburban feeling. Love it. I commute for an hour and third. Downtown areas just feel too busy for me; congested, noisy, claustrophobic.
Living in an apartment for your entire life is looked down upon, especially if you have a family.
Not sure about others but personally the yard, larger home, parking etc are a huge quality of life boost. I can sacrifice for a while, but eventually need to enjoy life a bit.
Why is it as the US' population went up, the US' health and food services quality degraded? Observe that the US' own stand-in for government/communist style supplied food services through the fast-food chains of McDonalds, Burger King, etc... as well as the food stuffs supplied by their groceries, contributed immensely to the degradation of US health.
The US "beef industry" irresponsibly used antibiotics to artificially fatten their cattle, causing everyone who ate their products to also consume those antibiotics. Also, the US' own companies push sugar saturated products to their youth without any disposition to responsibility, where sugar is known and has been known to cause serious health deficits.
The US practices culling of their population to reduce density.
edit: People have trouble viewing it in this light. A simpler way is to view it through its parallel in warfare. European and "civilized" warfare is the sudden loss of large portions of the population and able bodied men through massive violence organized by their "ruling parties". "Jungle" warfare is one where the losses on the participants isn't high per encounter, but is very high over the duration of their "war".
Despite the West criticizing Mao and Stalin of killing off many of their citizens, the US can also be found to have killed off many of their own citizens through the use of subtler methods.
For example, as the US' population became aware of the detrimental effects of tobacco (whose mortal danger to health was known in the West's "ruling class and educated" for centuries), the population loss related to tobacco induced health deficits dropped, while other issues began to surface and increase. The observable culling of the population is far more active in the US than it is in Russia or China for example (once one becomes aware that it is more subtle, and more like 'jungle/islander warfare')
The effect is more like what we in the US see in Detroit. Depopulation or very slow growth can result in a cool housing market. There are many uninhabited houses in and around the greater Tokyo metro -that helps a lot.
"The median price for a home in Tokyo and its surrounding three prefectures is 28 million yen, or around $270,000."
Just fyi, if you only include Tokyo, price nearly doubles. It doesn't make the best comparison because Tokyo + 3 prefecture = 38 million people with over 5000 square miles.
However, that chart alone is very compelling because it shows something that you don't see anywhere else; declining housing price.
Is centralized and lax housing regulations the main reason for this? I don't think the author makes a strong argument, but it's certainly a contributing reason.
A huge part of lower home prices in Japan is that they treat housing as a depreciating asset in their economy. So it's more like buying a car than making an investment.
That is an asian thing. Im seeing it with chinese buyers in Vancouver. They dont want a "used" house. New houses are being built to low standards on the assumption that any future buyer will rebuild anyway. Give me a 35yo house with a proven track record over some new thing that could be leaking come winter. Houses are not cars.
And as that Freakonomics episode notes, there's at least an argument that disposable houses have been a factor in the Japanese economic slump. There are good reasons to rebuild housing from scratch (and some Japanese history that probably played into the disposable housing dynamic). But compared to the US, rebuilding housing every 35 years means that you're destroying a lot of capital.
Much depends on specifics. Any 35yo house will have been built to radically different codes. It will probably not be near the maximum square footage now allowed on its lot. So, purely from an investor's point of view, the house is holding back the price. Pulling it may actually makes the land worth more. In my neighbourhood it isnt easy to get a permit simply to replace a small house with a larger one .... unless something catastrophic happens and the old house is doomed. There have been too many leaky roofs left for years, and a few fires, which conveniently lead to the house being declared unliveable or unsafe, the first step to getting a new permit. In such situations the house is definitely worth more down than up.
The Freakonomics podcast referenced upthread does mention earthquake codes and some other factors that have helped lead to houses becoming disposable. Nonetheless, I'd note though that it's not really the case in, say, the Bay Area. It's a behavior that seems to have evolved beyond practical reasons to become a cultural pattern.
There are also good reasons to junk old cars but it would be pretty inefficient if it became a societal taboo to drive a car over five years old or to purchase a used model.
It also helps when houses are being depopulated because people are aging out of houses.
There used to be an Australian guy who went around buying and fixing undervalued houses in Japan. While out in his searches, he'd point out the many unoccupied houses.
As an aside, when is Japan going to reconsider how it calculates unemployment? As it is, their unemployment is like 3.7% yet many many younger people work for as temps, which is sort of counterintuitive for a very tight labor market.
> yet many many younger people work for as temps, which is sort of counterintuitive for a very tight labor market.
because many of these temps younger folks are university students at the same time. In japan university is only very few hours of attendance every week, so it leaves them with tons of free time to get a side-job.
And yet that's the same way the US calculates unemployment for U3 (the most commonly reported rate), leading to the same misrepresentation of the actual unemployment situation.
Then I guess labor dynamics are different, else why does one see people doing low value add jobs like pachinko, vending machine stuffers, McDonald's, people "directing traffic" when they could get more meaningful jobs (if the job market is so good, esp. Tokyo)
U3 is standard precisely so that we can compare differences between countries. If people don't like what it's measuring, then they can certainly use one of the other metrics like U4, U5, or U6.
I don't have a problem with U3 at all. I have a problem with it being used as the de facto measure of employment health in the media when it tells only a small part of the story for average workers. You typically have to search for U6 yourself, while U3 is reported by the press every month.
Yes if you want to be a well informed citizen you have to mostly ignore the mainstream media and actively seek out alternative sources. That shouldn't be a surprise to anyone here.
That sounds bigger than it is. A circle with 40 mile radius ~= 5000miles. If you go a similar distance from NYC or DC etc the prices are still inflated because it's considered commuting distance, plus this is an average.
For comparison the US median home price is ~220k. But, the Median price in Fairfax VA which is 30 miles from DC is $510,000. Chantilly VA which is ~35 miles from DC is 400k.
Current market conditions in the US are a major outlier that will correct.
Prices are high because we have an inflationary monetary policy around housing. Essentially all mortgages are nearly risk-free to the lender, and are essentially implicit federal obligations.
I'm not sure it will correct as much as you think. The high prices are mostly driven by regional wealth inequality leading to the only good jobs being in a handful of cities. That job concentration massively increases housing costs in those areas. SV is a great example of this.
Per Wikipedia, New York city's land area is 790km^2. Tokyo's is 2187km^2. Tokyo Metro's population density is 6,224/km^2 (I picked the higher of the possible numbers for this). New York City's density is 10,431/km^2.
There's really no argument you can make that New York should be cheaper than Tokyo based on density alone. Tokyo's big secret is sprawl.
NYC is limited by arbritraty state lines, if you look at the physical reality there is just as much sprawl it's just across state lines past Newark which is the same metro area with slightly different taxes and still has 11,654 people per square mile.
Further people commute to the city's center which is why they tend to have lower population density than parts of their surrounding area. Which is why https://en.m.wikipedia.org/wiki/Guttenberg,_New_Jersey has twice NYC's population density even with shorter buildings.
It's really hard in general to compare metropolitan areas in an apple-to-apples way for reasons like this. As a result, people tend to draw misleading conclusions based on often meaningless administrative boundaries. (e.g. Paris often cited as having extraordinary high density based on the small area that is technically the city.)
Right, Tokyo is very wide-spread. I believe it's the incredible infrastructure that allows people to commute to work easily. There is surprisingly little traffic for a city of that size.
Leaving Tokyo for Kyoto by train I kept seeing apartment buildings and houses for the first 50km or so.
This sort of super sprawl is enabled by Japanese employers' promises of lifetime employment. You buy near where you work, and your job lasts as long as a mortgage. No need to buy in Mountain View because 20 employers are nearby.
> median price for a home in Tokyo and its surrounding three prefectures is 28 million yen
For this price you get a shack in the far suburbs of Tokyo. Anything remotely close to the center goes to 100 million yen. And prices are going up before of the Olympic Bubble, too. It's completely crazy.
Of course keeping in mind that a "far suburb of Tokyo" will still have a population of 400,000 or so, roughly comparable to the size of Miami or Oakland. Yokohama is definitely not Tokyo, but its population is 3.7 million, larger than Chicago and just a bit smaller than Los Angeles.
Agree with your point, but a bed town far away from the Tokyo center is still a bed town. Which not a very pleasant place to live in (99% residential, almost no stores, no restaurants around).
What I mean is, nothing nearby enough. The zoning is clearly made to favor residential spaces in extremely high proportions, unlike an ordinary city center.
>>> However, that chart alone is very compelling because it shows something that you don't see anywhere else; declining housing price.
I find it strange that you would think that. I would expect accommodation prices to drop in the vast majority of areas. Obviously, I am biased the other way because of the places I know.
The economy outside of major cities is pretty bad and it's only getting worse.
P.S. There is also a matter of timespan. If you look at 20-30 years, everything is going up. If you look at 1-5 years, it's stable or going down.
In 20-30 years an accommodation loses about 50 to 60% of its value in Japan. The only thing that is stable or gaining any value in Japan is land. The rest is just a deprecating asset.
This is why you buy a fully-depreciated ~40-year-old apartment or house.
I spent my entire life's savings to do this and it was the best decision I ever made. When and if I leave Tokyo, I will rent it out for side income. I can't overstate the peace of mind this gives me.
When I was young I remember reading about "Tokyo, the city of $11 hot dogs"...this was when a normal hot dog in the states was a buck or two.
I never really stopped to figure that maybe it was just foreign stuff that was crazy expensive. One of the really eye opening things I've learned in the last few years is how relatively affordable housing can be...even within the Tokyo city limits. https://www.youtube.com/watch?v=iGbC5j4pG9w -- older homes can be much much cheaper.
This needs to be considered against local incomes of course, so they're a bit less tempting to locals than to American foreigners from ultra expensive coastal cities.
Part of this seems to be the particular Japanese combination of the shrinking and aging population + continued attempts at maintaining GDP via construction works + cultural preference for new living arrangements instead of old construction. But like anyplace, you pay for where you live and there are certainly incredibly expensive places to live.
Outside of living arrangements, public transport, food, clothes, and so on...everything except for personal vehicles is relatively affordable on a foreigner's salary.
However, salaries in Japan are surprisingly (sometimes shockingly low). I think I've heard that a person working in a regular "salaryman" job can expect to earn around their age * 10,000 USD. So if you're 30, you'll make around $30k USD. This information is a bit old, so expect it to be a little higher, but this table [1] from 2014 suggests a 32.4 year old computer programmer makes an average of 4,256,000 yen per year..or about $38k. Some occupations can make significantly more...but it's interesting to find yourself on this table and consider it.
And depending how much you trust your numbers there are ten public school teachers in Mississippi for every google engineer. And there's almost fifty more states full of teachers... And they'll owe roughly the same student loan balance at graduation, well, in theory they would, if not correcting for extreme lack of diversity at Google.
> This information is a bit old, so expect it to be a little higher
Remember Japan doesn't really have inflation, so... not really. When they raised the sales tax to 8% it was an unexpectedly large problem because so many vending machines suddenly couldn't just charge 100 yen as they had for a decade, and raising by 10 yen (the smallest coin accepted by vending machines) would be too big a raise
Sorry for being a bit OT but you may remember last year a boy was missing for several days in a remote forest region of Japan. I found that surprising, my prejudice of Japan had been that it was very heavily populated and urbanised but when I looked it up I discovered that it is an incredibly forested country with 70% of the country this way. Practically twice that of the USA.
But it's great for them to have such wildernesses. Western Europe is bereft by comparison and we've even cut down the trees on our mountains and put sheep and deer there to prevent them coming back.
What never fails to amaze is how Tokyo, for being the world's most populous and largest city according to a number of metrics, is so clean and orderly, not to mention safe.
Just watch any of the street tours and stroll-throughs on YouTube [0][1][2]. There is almost a serene quality despite the crowds, and so very far from the dystopian "cyberpunk" vision that we've been taught to expect from "megacities."
This article from 2014 has problems. In 2016 Tokyo:
"Existing condominium units’ average prices rose by 3.73%...
New condominium units’ average prices skyrocketed by 21.2%..."
"...last year was particularly bad for housing starts in Tokyo Metropolitan Area, with 9.9% less new condominiums (40,449 units) being put on the market – the lowest level since 2010..." [1]
Basically the article has a politicized tone, comes from an urbanism advocacy group, ignores the recession, ignores Abenomics, misrepresents the true fluctuation of the real estate market in urban centers, jumps straight to "regulation" as the culprit, and is strikingly dismissive of environmental concerns.
It seems like there should be an arbitrage opportunity here, doing some kind of development in Japan vs. the US. The problem is for hardware it seems to make more sense to go even farther to China (where all the manufacturing is, anyway).
It's a cultural thing. They do the same with cars. It is very common to find engines and transmissions with 60k km on them available for import into the US at bargain prices.
I don't know about Japanese house inspection culture, but their car inspection system is designed to keep only new cars on the road. Essentially a stealth tax to discourage driving. So if your car fails inspection, which costs about $1000 just to attempt, you may as well part it out to Americans and buy another car...
Its possible given that Japanese don't like used houses that something similar exists for purchase of a used house, perhaps an inspection that costs $25K would discourage used house purchases.
The article attempts to claim that Japanese policymaking is somehow responsible for low prices. Correlation is not causation. For example one could posit that Japan is affordable precisely because nobody has any money, because their economy has been stagnant for two decades and against an aging population and reduced investment in critical technology such as industrial robotics it shows every sign of remaining so. Perhaps for many hope has left the building and with the absence of meaning life has become a rinse-and-repeat ritual of careful commuting.
Maybe housing in Japan wouldn't be so expensive if they didn't keep knocking down perfectly good houses to build a new one. It seems like they throw away a lot of value.
Home ownership in Japan is not a permanent thing, however. You build a new house every 3 decades. This is going to drive the cost down during the time that you're paying for a house, sure - you use cheaper materials, everything is build with a short timeframe, etc. But if I buy a house here on a 30 year loan, at the end of the 30 years, I'm no longer paying that off. It's just property taxes and upkeep, etc. In Tokyo, at the end of those 30 years I'm building a new house. I don't ever stop.
There's no point where I go "Yep, mortgage is paid off, I don't plan on ever moving, or if I do, I can sell this house for enough to pay for another house that I can just move in to."
Any single month or year might be cheaper, but it still costs a lot more in the long run to perpetually be paying for your house.
> Unlike people living in Western nations, residents of Japan have not benefited from an increase in the value of the nation’s housing stock. Houses here last only about 30 years on average, effectively making them a durable consumer good, whereas in Western countries a house is a capital good that will retain its value almost in perpetuity as long as it is properly maintained. The market value of Japanese houses falls even faster than they can be depreciated for tax purposes; after 15 years the typical house is worth nothing.
A big part of my net worth is the equity in my house. I'd be much poorer if my home depreciated to zero after 15 years.
Only people that buy the plot after someone else moves out build a new house. It generally retains the exact same house for the durations of someone's life there.
While I imagine this is true for some people, the average of houses when torn down in Japan is 30 years according to their Ministry of Land, and I have multiple co-workers who have spoken about moving their family in with their or their spouse's parents while having their home torn down and rebuilt.
That may be true, but it's also true that the house isn't much of an asset. Houses in the US are a capital investment. In Japan, they are more like durable goods.
Did you read the article? It says that the population of Tokyo has been growing (despite the country's population slightly decreasing), and also, the Japanese tend to prefer new construction.
They buried the lede (presumably since it was inconvenient to the thesis of the piece):
“Housing is seriously unaffordable in Tokyo-Yokohama, with a 4.4 Average Multiple (average house price divided by average household income). Osaka-Kobe-Kyoto has an Average Multiple of 3.5 and is thus rated as moderately unaffordable. Despite these ratings, Japan has the most affordable housing of any megacities (over 10,000,000 residents) in the Demographia Survey.”
If you think real estate in Japan is "affordable", you need only talk to Japanese people. Salaries here are low, and the economy has been stagnant for decades. Younger people tend to live with their parents until marriage, and if you ask them why, they'll tell you: they can't afford to live on their own.
Yes, Construction is rampant, but that's mostly because buildings here are ripped down every few decades, not because cities are necessarily building more or larger buildings. There's just tons of churn.
I've said it before, and I'll say it again: if you want affordable cities, a big part of the "secret" is tanking your economy for a few decades.
And yet it is much more affordable than, say, San Francisco (9.2) or Vancouver (10.3) by that same metric, which was their point. By this metric at least, Tokyo fares far better than comparable cities - no lede buried.
They have buried the lede, though. They can say 'More Affordable' megacities, but still not affordable. And they include Yokohama, which is still a lot cheaper than Tokyo proper. They've basically included commuting distance cities outside of Tokyo in the calculation to reach these numbers. What happens if you do the same for SF or Vancouver?
"By this metric at least, Tokyo fares far better than comparable cities - no lede buried."
But to make that comparison fair, you need to control for a lot of important factors. I've named a couple of big ones. There are others (like land area - Tokyo is huge. SF and Vancouver are tiny and constrained by geography.)
This article simply asserts that Tokyo is affordable (which, again, it is not), and that its "affordability" is due to construction. There's no real data here that supports that conclusion. It might be "relatively" more affordable than the frothiest global markets, but SF and Vancouver have been experiencing much higher population growth over the last decade, and SF in particular has been ground zero for a massive speculative bubble. The comparison is apples and oranges.
The article's thesis is contradicted by the evidence cited by the article itself: Japan's cities are not "affordable" to the people who live there.
Arguing that Japanese cities are "more affordable" than other, less-affordable cities is a truism; by definition, every city that is less expensive than another city is doing something that makes it cheaper. This fact alone provides no useful information. But some people really want to believe that Japan's building habits are the answer, and not, say, their 30-year recession, or sprawl, or any of dozens of other factors.
Perhaps "buried the lede" is not the right phrase for this kind of thing, but it's still nonsense.
If you think the situation is bad, you need some perspective. That is massively better than any major coastal city in the US, and better than any first world city that is growing.
And even if it were bad by global standards, I'm pretty sure stagnant wages and declining housing costs is a way better situation than ours with declining wages and rapidly increasing housing costs.
Tokyo Metro's population (2016) is 13 million. So it grew by 13% in ~16 years, or about 0.88% per year.
Whether or not you consider that "a lot", it's not an exceptional number. It's also impossible to know how that translates to "new units" without knowing a lot of other factors.
It gets harder not easer to add housing as population increases so the % growth is almost meaningless. Also you can look at utilization numbers from 2000 to see it really is new housing and largely from replacing smaller buildings with larger ones which means each building starts with the deficit that it needs to replace the old buildings population.
