Not that many people in Tokyo live in single-family homes; towers and other multi-unit buildings are very common. It's very common to see older buildings torn down and replaced with taller buildings, so even though they're losing the units in the demolished building, there's a significant net gain in units.

And these days, I don't think anyone is demolishing a house after only 20 years. 40-50 years certainly; those structures are unsafe because they don't meet modern buildings codes. Anything built before ~1981 is considered generally unsafe.