Housing Markets and Household Behavior in Japan (eBook)

Preface 6
Contents 9
About the Author 15
1 Introduction: Purpose and Organization of This Book 16
1.1 Purpose of This Book 16
1.2 Organization and Preview of Each Chapter of This Book 17
Housing Markets and the Macro Economy 19
2 House-Price Dynamics and Effects on the Macro Economy 20
2.1 Introduction 21
2.2 Residential Mobility Decisions Under the Recourse-Loan System 22
2.2.1 Introduction 22
2.2.2 Data and the Econometric Model 25
2.2.3 Estimation Results 29
2.2.4 Summary 31
2.3 Leverage and House-Price Dynamics Under the Recourse-Loan System 31
2.3.1 Introduction 31
2.3.2 Literature Review 33
2.3.3 Model 33
2.3.4 Data 35
2.3.5 Empirical Estimation 37
2.3.6 Summary 39
2.4 Conclusion 42
References 43
3 Housing Market Imperfections and Distortions Resulting from Criteria Based on House Floor Space 45
3.1 Introduction 45
3.2 Space-Linked Housing Finance System 46
3.3 A Model of Floor-Space Demand and Data Considerations 58
3.3.1 A Model of Floor-Space Demand 58
3.3.2 Data Considerations 61
3.4 Estimation Model 65
3.4.1 The Model and Estimating Techniques 65
3.4.2 Estimation Results 68
3.5 Policy Simulations 70
3.6 Summary and Conclusion 71
References 72
4 Housing and Housing Finance Markets 74
4.1 Introduction 74
4.2 Overview of the Japanese Economy, Housing Markets, and Housing Finance 74
4.2.1 The Japanese Economy 75
4.2.2 Land and Housing Markets 76
4.2.3 Housing Finance Market in Japan 79
4.3 Japan’s Housing Market and Possible Policy Reforms 81
4.4 Conclusion 83
References 84
Housing Tenure and Changes in Economic Welfare 86
5 Effects of Systems and Regulations on Residential Mobility 87
5.1 Introduction 88
5.2 Overview of the Japanese Economy, Housing Markets and Housing-Related Policies and Systems in Japan 89
5.2.1 Effect of Asset Price Deflation on the Owned Housing Market 89
5.2.2 Effect of the Japan Rental Act on the Rented Housing Market 91
5.3 Hazard Model 92
5.4 Data 93
5.4.1 Explanation of Our Main KHPS Data and the Length-of-Stay Data 93
5.4.2 Determinants of Residential Moves in Japan 94
5.4.3 Descriptive Statistics of the Sample 98
5.5 Effects of the Implementation of an Income Tax Deduction System Regarding the Carrying Over of Capital Losses on Owners’ Mobility 99
5.5.1 Estimation Results of the Hazard Function for Residential Moves from Owned Housing 99
5.5.2 Effect of the Establishment of the Tax Deduction System Regarding the Carrying Over of Capital Losses for Specific Houses on Owners’ Mobility 101
5.6 Effects of Japan Rental Act on Renters’ Mobility 102
5.6.1 Estimation Results of the Hazard Function for Renters’ Residential Moves 102
5.6.2 Effects of Japan Rental Act on Renters’ Mobility 104
5.7 Conclusion 105
Appendix: Construction of taxdedc and dirc Variables in the Estimation of the Hazard Function 106
References 111
6 Housing Tenure Choice After the Revision of the Rental Act 112
6.1 Introduction 113
6.1.1 Background of Introducing Rental Housing with a Fixed Rental Term: Drawback of the Old Rental Act 113
6.1.2 Revision of the Rental Act: Comparison of Two Types of Rental Housing 114
6.1.3 The Purpose of This Chapter 115
6.2 Data and Hypothesis 116
6.2.1 Dataset 116
6.2.2 Descriptive Statistics of Housing Characteristics 117
6.2.3 Descriptive Statistics of Household Characteristics 120
6.3 Conditional Logit Model and Estimation Procedure 121
6.4 Estimation Results 122
6.5 Welfare Implications of the Revision of the Rental Act 124
6.6 Conclusion 129
References 129
7 The Term Premium of Cancellable Lease Rates 131
7.1 Introduction 131
7.2 Model 135
7.2.1 Characterization of Cancellable Leases 136
7.2.2 Term Structure for Cancellable Leases 137
7.3 Calibration to Japanese Data 138
7.4 Data 140
7.4.1 Descriptive Statistics and Probit Regressions 141
7.4.2 Calculating Predictive Errors 146
7.5 Empirical Results 151
7.5.1 Empirical Model 151
7.5.2 Estimation Results 152
7.6 Conclusion 156
Appendix: Relative Rent Regression by the Least Absolute Deviation Method 156
References 161
Earthquake Risk and the Residential Market 163
8 Earthquake Risk and a Quality of Life Index 164
8.1 Introduction 164
8.2 Literature Review 166
8.3 The Model of Compensating Differentials and the QOLI 167
8.4 Estimation of Hedonic Models of Housing Price and Hourly Wage, and Construction of the QOLI 169
8.4.1 Data 169
8.4.2 Estimation of Hedonic Model of Housing Rent and Wage 173
8.4.3 Estimation Results 174
8.4.4 Calculation of QOLI 176
8.5 The Interregional Variation of Pecuniary Costs of Earthquakes and Earthquake Insurance 177
8.6 Conclusion 181
References 181
9 Valuation of Earthquake Risk in Housing Markets 183
9.1 Introduction 183
9.2 Previous Studies 184
9.3 Data and Methodology 186
9.3.1 Data 186
9.3.2 Empirical Model and Variables 187
9.4 Empirical Results 190
9.4.1 Baseline Result 191
9.4.2 Changes in Effect of Earthquake Risk by Dwelling Types 194
9.5 Conclusion 197
References 197
10 Consumer Valuation of Earthquake Risk Before and After Massive Earthquakes 199
10.1 Introduction 199
10.2 Theoretical Considerations: Hedonic Pricing Model with Uncertain Hazardous Events 201
10.3 Data and Methodology 203
10.3.1 Data 203
10.3.2 Empirical Model 204
10.4 Empirical Results 205
10.4.1 Baseline Results 205
10.4.2 Effects of Earthquake Risk Before and After Massive Earthquakes 209
10.5 Conclusion 212
References 213
11 Earthquake Insurance Subscription Rates and Regional Cross-Subsidies 214
11.1 Introduction 214
11.2 Earthquake Insurance System in Japan 216
11.3 Literature Review 218
11.4 The Model 218
11.5 Estimation 222
11.5.1 Data 222
11.5.2 Estimation Results 226
11.5.3 Simulation 229
11.6 Conclusion 231
References 232
Households’ Behavioral Responses after the Great East Japan Earthquake 233
12 Perceived Preparedness and Attitude of Japanese Households Toward Risk Mitigation Activities Following the Great East Japan Earthquake: Earthquake Insurance Purchase and Seismic Retrofitting 234
12.1 Introduction 235
12.2 Earthquake Insurance System in Japan 237
12.3 Post-quake Supplement of KHPS/JHPS 238
12.4 Estimation of Post-quake Changes in Perceived Preparedness for Natural Disaster 242
12.5 Estimation of Post-quake Intentions for Risk Mitigation Activities Based on the First PQS 244
12.6 Estimation of Post-quake Intentions and Dissatisfaction About Earthquake Insurance Based on the Second PQS 246
12.7 Concluding Remarks 250
References 251
13 Households’ Risk Mitigation Activities and Risk Perception Bias: Earthquake Insurance Purchase and Seismic Retrofitting 253
13.1 Introduction 253
13.2 Data 257
13.3 Estimation 263
13.4 Conclusion 269
Appendix 1: Old and New Risk Rating Zones of Earthquake Insurance Premiums 271
Appendix 2: Estimation Result of Risk Mitigation Activities Before March 11, 2011 (First Stage of Sample Selection Model) 271
References 273
Policy Implications of This Book 275
14 Conclusion: Policy Implications and Future Research 276
14.1 Policy Implications 276
14.2 Future Research 278
14.2.1 Designing a Housing Finance System 278
14.2.2 Liquidity and Provision in the Rental Housing Market 279
14.2.3 Earthquake Risk and Disaster Prevention Policies 280
Reference 283
Index 284