What types of houses remain vacant? Evidence from a municipality in Tokyo, Japan

Abstract

Preventing the occurrence of vacant houses and reutilizing existing vacant houses are two known ways of addressing housing vacancies. This study uses parcel-level data on single-family houses in the municipality of Toshima in Tokyo, Japan, to examine determinants of the occurrence and reutilization of vacant houses. The data reveal that, conditional on land prices, houses with restricted and costly redevelopment opportunities are more likely to become vacant. The results suggest that owners with such properties disregard the redevelopment potential and, as a result, tend to have a high reservation price relative to the market value. Consequently, owners face difficulty finding a transaction partner and even become reluctant to engage in a deal (i.e., they withdraw from the market). The results also suggest that revitalization of the neighborhood community may contribute to activating vacant houses. Local governments can use an empirical assessment such as this to implement efficient measures by targeting houses that have a high probability of becoming and remaining vacant.