Today’s post is going to be a short add-on to yesterday’s post about the sinking Millennium Tower in San Francisco. Today, the New York Times published the below map showing the areas of the city likely to “liquefy in an earthquake.” It goes on to note that “at least 100 buildings taller than 240 feet were built in areas that have a “very high” chance of liquefaction.”
The article might leave you with the feeling that current building codes are inadequate for the pending “Big One” in San Francisco. So I thought I would reblog this post from last fall which talks, in more detail, about how one of the best structural engineering firms in the world designed the tallest building in San Francisco.
Image: New York Times
As further evidence that real estate is a local business, let’s take a look at the housing market in Japan today. It’s a very unique market.
According to this Freakonomics podcast, 50% of all single family houses in Japan are demolished by the time they reach 38 years old. That’s their half-life. By contrast, in the US, this number is 100 years.
The reason for this is rapid depreciation. Real property typically consists of two things: land and the building. Land doesn’t depreciate. But the structure sitting on the land does.
In Japan, the building or structure is thought to be fully depreciated (and therefore worth nothing) after about 30 years for a single-family home and after about 40 years for an apartment/condominium.
The result is that there’s virtually no resale housing market. When somebody buys a house, it is usually torn down and completely rebuilt. It’s a uniquely Japanese phenomenon.
So why does this happen?
The Freakonomics podcast presents a couple of hypothesis. Some believe that it’s caused by a Japanese fixation with newness. New is seen as pure and clean.
Others believe that it has to do with a building code that is constantly changing due to the high frequency of earthquakes in Japan. 20% of the world’s earthquakes with a magnitude of 6.0 or greater happen in Japan. And so there appears to be a belief that newer homes – with the latest seismic technologies – are the safest.
Whatever the case may be, the fact that there’s virtually no resale housing market in Japan, not surprisingly, produces some interesting outcomes. For one, maintenance and DIY home projects are uncommon. Why invest in your home when it’s not viewed as an asset, but as a disposable good?
At the same time, people worry very little about marketability when they are building new. And this is a big reason why Japan is so famous for its radically designed homes. When you’re building only for yourself, you just do what you want.
But most importantly, some (such as Richard Koo, who is interviewed in the podcast) believe that this approach to housing is a huge “obstacle to affluence.” Without a functioning resale market, the Japanese don’t get the opportunity to build wealth/equity in the same way that other countries do.
Do you buy that?
Earlier today I tweeted this:
What Other Cities Learned: These five tore down highways and reaped the rewards. http://t.co/aR8STHTX9o #urbanism pic.twitter.com/I07iwRF8EP
— Brandon G. Donnelly (@donnelly_b)
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It’s a link to an article talking about 5 cities – New York, Milwaukee, Seoul, Portland, and San Francisco – who all demolished an elevated highway that used to run through their downtowns.
To be completely fair, some of these cities didn’t really have a choice. San Francisco’s Central Freeway was so badly damaged in an earthquake that it had to be closed. But it doesn’t make the lessons any less relevant.
In all of these cases, the elevated highways were taken down and never replaced with another highway. Some were turned into large boulevards. Others were turned into parks. But in none of the cases was a new road of similar capacity built.
Intuitively it might seem like this would cause utter chaos. I mean, where were all of these cars going to go?
But that didn’t happen. Instead, demand redistributed itself. Car volumes dropped dramatically. More people took transit. Some people took other routes. And some people traveled at different times. Oh, and nearby property values all went up.
And the reason this happened is because of something that economists call induced demand (I’ve written about it before, here). What it means is that as you increase the supply of some valuable good (such as free highways), more of that good becomes demanded.
In other words: more free highways = more cars on the road.
So if you’re a city – like Toronto – with an elevated highway running through your downtown, you should give this some serious thought. The outcomes aren’t as bad as you might think. In fact, they’re quite good.
Image: Seoul via D Magazine