This book addresses essential questions about housing by building theoretical models based on various real world problems in Japan and testing these models using econometric methods. Almost all related empirical analyses use Japanese household longitudinal data. Accordingly, the author analyzes whole aspects of the data, based on an understanding of the actual situation, theory, and empirical analysis, to directly derive a vision of a future housing policy.

Why are houses expensive and difficult to obtain in Japan? Why do people have to live in small houses? Why do people not relocate frequently? Why is the earthquake insurance subscription rate so low, particularly in an earthquake-prone country such as Japan, even after such a catastrophic event as the Great East Japan Earthquake of 2011? How do existing housing finance and tax policies or laws relate to these real world problems? To answer these questions, the book clarifies the unique criteria that characterize housing problems in Japan and presents a vision of future housing policy.

The short answers are that existing housing finance and tax policies that adopt criteria based on the floor space of houses create incentives for people to live in even smaller houses. Furthermore, the Japan Rental Act, which affects people renting homes, reduces residential mobility. The incidence of underinsurance against earthquake risk is a result of earthquake insurance market imperfections such as crude and rough geographical risk ratings.

Keywords: Residential mobility, Housing equity constraint, Housing tenure choice, Rent control, Earthquake risk, Earthquake insurance

Part I. Housing Markets and the Macro Economy
Part II. Housing Tenure and Changes in Economic Welfare
Part III. Earthquake Risk and the Residential Market
Part IV. Households' Behavioral Responses after the Great East Japan Earthquake
Part V. Policy Implications of This Book

Why houses are expensive and difficult to obtain. Why people have to live in small houses. We clarify reasons that characterize unique structures of housing problems in Japan and present a vision of future housing policy.

Existing housing finance / tax policies which adopt criterions based on floor spaces of houses result in accelerating people having to live in further smaller houses. In addition, high mobility costs due to housing market imperfections impair relocation. On the other hand, intergenerational (two generations or three generations) co-residences are common in Japan and these function as the younger generation takes care of the older generation thus supporting the society of the aged.

This book consists of building theoretical models based on these various real world problems and tests these models using the most forefront econometric methods such as nonlinear econometric analysis.

We analyze whole aspects based on the understanding of the actual situation, the theory and the empirical analysis and try to directly give an answer of a housing vision on the basis of plentiful living in the 21st century. This is the achievement of this book.