Japan’s Love Affair with Modular Homes

What we can learn in the West and what we can learn as foreign buyers in Japan.

Sekisui Chemicals Prefabbed home

Unlike in the U.S., where prefab or modular homes often carry a stigma of being lower quality than custom-built houses, Japan flips that narrative around. Even though prefab homes make up a similar market share in both countries, they serve totally different segments. In the U.S., prefab usually means budget housing. In Japan, it’s often the premium option.

Japanese prefab companies are world leaders when it comes to design, durability, and user experience. Many offer surprisingly high levels of customization with user input throughout the whole process. Two of the biggest players are Daiwa House and Sekisui House, with entry-level models starting around ¥20 million.

Some of the biggest names in Japan’s prefab scene are car companies. Toyota, Honda, and Mitsubishi all have prefab housing divisions. Toyota Home has been cranking out homes since 1977. Yeah, Toyota builds houses. Pretty mind-blowing in my opinion.

Most of these companies still sell almost exclusively in Japan, which feels like a massive, missed opportunity. (Side note: I did come across an article saying Daiwa House’s U.S. division is opening factories in the States in 2025, so maybe that’s about to change.)

These homes are unlike anything you’ve ever seen in the US. They’re not single choice, cookie cutter homes. They’re smart, sleek, incredibly earthquake-resistant (some of the highest earthquake ratings for any homes on the planet) and built with the kind of precision you’d expect from a country that builds bullet trains and luxury toilets seats.

Why are modular homes in Japan so much more accepted, and often considered superior, over custom-built homes? The answer goes way back to the post–World War II baby boom, and one oddly named little structure: the Midget House. Daiwa House, now one of Japan’s largest homebuilders, got its start during this era.

With Japan’s population booming and homes getting crowded fast, families needed a quick fix. The Midget House was exactly that, a tiny prefab study space parents could set up in the backyard to give their kids somewhere to do homework and themselves a break. Fully prefabbed and assembled in just three hours, it was basically the first “backyard office”, but instead of Paperwork you’d find crayons.

The concept took off. Alongside the Pipe House (another early prefab model), the Midget House’s success led Daiwa to open Japan’s first dedicated prefab housing factory in 1965.

Postwar Japan was short an estimated 4.2 million due to a population boom and the massive destruction caused by the US military (While people often focus on the nuclear bombings, Tokyo’s firing bombing were significantly more destructive in terms of deaths and buildings destroyed).

Construction labor couldn’t keep pace, and prefab companies swooped in to fill the gap. Over time, prefab homes in Japan evolved into a premium product.

Today, they’re often higher quality than traditional custom builds, more durable, more energy efficient, and often more innovative. It’s not uncommon for homeowners to prefer a high-end modular home over a custom built one.

Even Japan’s auto giants saw the opportunity. With their advanced manufacturing expertise, companies like Toyota, Honda, and Mitsubishi were natural fits for prefab housing.

While Japan’s post–World War II housing crisis was driven by forces outside their control like war destruction, a baby boom, rapid urbanization. There are still valuable lessons in how they solved it. And honestly, the West could use a few of those lessons right now.

Our housing crisis feels like it’s on a loop. Except here, it’s largely self-inflicted. Overregulation and NIMBY politics have created a system of artificial scarcity. Meanwhile, Japan embraced prefab innovation, cut through bureaucracy, and scaled housing like it was an industrial product, because it was and still is.

Some countries are starting to see it. Canada’s new Prime Minister just made a $25 billion bet on building out a national prefab housing industry to tackle their supply crunch. Maybe he should pick up the phone and call Prime Minister Shigeru Ishiba (or better yet, Daiwa House) and take some notes from the country that perfected the model.

Today’s Japanese prefab homes aren’t just efficient. They offer extremely high levels of customization, it’s hard to imagine coming from a western mindset how much customization these prefab homes have.

I’d wager there’s more customization with these Japanese prefab homes than with any builder you know in the U.S, who, let’s be honest, usually offer a pretty limited range of cookie-cutter designs. Theres also much less environmental waste, and dramatically shorter build times.

In Japan, the lead time from ordering your home to moving in is Just 40 days. I’ve seen builds in the U.S. drag on for six months or more and that’s if nothing goes wrong.

One of the things I often recommend to clients (if they’ve got the budget) is to buy an old home in a great location, usually dirt cheap and drop a brand-new prefab on it. It’s like hacking the Japanese real estate system. You get location and modern construction at a fraction of the price of doing a custom build in the West.

Coming from a Western world where housing shortages have been a storyline pretty much my entire 31 year existence, it’s honestly kind of surreal to see a country that has managed to keep homes affordable and available for nearly 80 years. Japan proved it’s possible.

Don’t forget about the Referral Program!
Share any of our newsletters—get us 5 new subscribers—and you’ll score a custom Yuki Homes heavyweight tee, screen printed in Brooklyn and designed by our insanely talented friend Erick.

Not some cheap heat-press junk. We're talking real quality, real style.
Start sharing. Start earning. Start looking good.

Serious about buying a home in Japan—especially in Hokkaido?
Subscribe to our exclusive paid blog and get insider access to Japan’s most promising real estate opportunities. Each month, we send you 10 top property picks, complete with:

• ROI potential breakdowns

• Estimated renovation costs

• Proximity to ski resorts, amenities, and transport

• Personalized Q&A access, ask us anything about the listings or the Japan market