Except no one decided that - it falls naturally out of the facts that homes are expensive (and therefore represent a large chunk of the wealth of most people) and that homes do not depreciate very much as a result of people living in them.

Except that voters in California effectively did decide that, with Prop 13. In other states, property tax is effectively a liability for the owner. Texans pay roughly 3% of the current value. That is a lot-- keep in mind that mortgage interest is only slightly higher than 3% (and loan is based on the initial purchase price, ie it doesn't go up like property tax). In California, Prop 13 is essentially an entitlement for the owner, who only pays roughly 1% of the value, and that value is not increased along with the market (only tiny increases are allowed).

> homes do not depreciate very much as a result of people living in them.

I get what you are saying, but this part above isn't a "natural order of things". For example, homes in Japan are expensive (perhaps representing an even larger fraction of lifetime earnings than in the Statse) yet they depreciate like they are cars.

Honest question: Why?

My home is about 30 years old and honestly the only way you'd know that is by recognizing certain features and techniques that pin it to that general time period of construction and code requirements. It's not like everything shows "30 years of wear" on it. (Of course all the surfaces have been replaced at least once over time, but by mass of the house that's not that much; maintenance is maintenance.) So it seems sensible to me that it hasn't depreciated all that much, in the way that, say, a computer from the same time period is basically worth whichever is greater of "nostalgia" and "scrap metal" value.

I do think the psychology is similar to why a car suddenly drops 30% in value the moment you drive in out of the dealer's parking lot.

For what it's worth, the 30 year old house will show wear in places you can't see, like the plumbing or the electrical wiring or the roofing. My parents' place is about 30 years old now and there's a fairly constant stream of small repairs that have been necessary over the last few years.

I don't really know, but I read an article that said earthquakes contribute significantly to depreciation in Japan. If the structures just don't hold up as long due to the harsh conditions, it would make sense that old structures would be worth less.

It's true that there's no law of nature that dictates housing depreciation. However, I will say that all of America works this way, and has for at least as long as I have been alive - houses hold onto their value. That fact may be culturally bound, but the point still remains that no one decided that this should the case, nor is there some law or policy that keeps homes from depreciating.

They depreciate like they are cars because Japan focuses on the new. You don't buy a house, you buy the land, knock down the existing house, and build a new one. You don't buy a used car, you buy a new one unless you're broke. There's precious little used market for anything, which can be a boon to those of us who want to buy nice used film cameras from Japanese ebay sellers.

except used video games and used books :)

By the way Yahoo Auctions is much more popular than eBay in Japan so you might check that out.