When we first met the realtor who was selling the land we were interested in at the actual lot, he brought with him a rough visual of the sort of house that could be built on it, along with a mock loan repayment scheme to show how cheap the monthly payments could be. At that point we hadn’t talked about our financial situation or what sort of house we wanted to build, and if we were impressed by the agent’s proactive salesmanship we were also leery of what it might lead to. Of course he wanted a sale on the land, but at ¥5.3 million his company wasn’t going to make a whole lot of money on the deal. What they wanted was also to build our house for us, and help us secure a mortgage. They were basically acting as developers, and had purchased this tract of land (relatively cheaply, because it was still being “adjusted for urban zoning”) with the idea that they could broker deals for houses and make even more money. Later, we would find out that of the five houses already constructed in the subdivision, only one had been built through the realtor. What impressed us about their offer wasn’t the forward thinking but rather the price. The agent said they could build us a house for ¥300,000 per tsubo (3.3 square meters) of floor area. In our mind we estimated that we wouldn’t need more than 30 tsubo, which means they could build us a house for ¥9 million, which was well within our budget. So while we didn’t say we would work with his company, we didn’t say we wouldn’t either.
We were still interested in using a housing company headquartered in Ibaraki called A-1, which we wrote about here in early 2012. Last winter, in fact, after we abandoned our plans to buy a used house or condo and renovate it, we rented a car and drove to their offices near Kasumigaura and interviewed the company president. Kazumi Arai comes across as more of a business philosopher than a businessman, someone with a vision who has assembled a staff that can realize his vision in a practical way. (Later, we learned that Arai has an architect’s license) The explanation he gave us of his company was almost identical to the one he gave to The Japan Times, which is where we first learned about A-1, and, frankly, it was the philosophy that attracted us. Arai’s position is that owning a house should not be an impossible dream, but because of the cost of land in Japan and the way the housing industry is structured, the average person looks upon it as an almost insurmountable financial undertaking. He believes people pay way too much for homes. A-1 keeps costs down in a variety of ways, mainly by cutting promotional budgets. The company does not advertise. It does not build model homes. Also, it is mainly a design company. It offers several basic floor plans that range in price from ¥9 to ¥11 million, and the customer then tells the architect what he/she wants. The architect amends the basic design accordingly, which means A-1 makes money on the design aspects, but it also helps the customer save money on materials. For instance, most major home builders’ designs have lots of rooms and walls, which add to the cost of a house, but A-1 points out that hallways are often unnecessary, and if the layout is carefully considered fewer walls can be built without any loss of privacy. In addition, their workers are trained in a variety of skills to save on labor costs. For each job, a builder usually has to hire someone skilled in that particular trade, be it plumbing, dry wall, whatever. A-1 tries to hire as few people as possible. Read More
Having lost interest in the land in Makinosato, we felt as if we’d retreated to square one. There was still that lot near Shimosa-Manzaki station, but besides being really cheap it didn’t offer anything we could get excited about. Our disinterest was rooted in the same feeling that made it easy to drop the Makinosato plan: We didn’t really want to live in a subdivision, though we also understood that if we wanted to remain in this particular stretch of Chiba Prefecture and weren’t going to pay more than ¥5 million, the only lots we could afford were in subdivisions. This feeling turned to something like despair when several large tracts of land close to our train station were suddenly opened for development. As mentioned elsewhere in this blog, we live in what is called Chiba New Town, which stretches across parts of three cities in northern Chiba Prefecture. As a housing and commercial project developed by the government housing authority in the 1960s and 70s, management eventually fell to the authority’s semi-private successor, UR, which was stuck with a lot of land that was never developed because Chiba New Town didn’t attract residents and businesses in the numbers the government originally envisioned. But the government has also given UR a deadline to get out of the land development business and that deadline is next March. So suddenly, all these overgrown fields bordering the Hokuso Line are being bulldozed and subdivided, and several weeks ago housing companies and real estate agents started advertising the plots, which start at about ¥11 million for 200 square meters. So even though there will be hundreds of plots made available soon in subdivisions we would probably prefer not living in, we at least have to double our land purchase budget in order to buy one.
So after a short respite we resumed our seemingly endless Internet search, checking portal sites for anything–land, condos, used houses–that might offer us something appealing. In terms of land, we increased the budget to see what was available. Portal sites have series of buttons you check to narrow the search, and land prices are normally tiered in multiples of ¥5 million. In the past we’d input the very smallest amount, but now we broadened the search to ¥10 million in the areas we were interested in. There was a lot more available, obviously, and since we’ve been at this thing a while we’ve become better at rejecting properties without looking too closely at them. Read More
Earlier this week the national tax agency announced that, on average, land values throughout Japan went down 1.8 percent, raising hopes in financial circles since it’s the lowest drop in a long time. Any sign that the economy is improving is given a lot of play in the media, though a closer reading of the statistics indicates it may not be what it seems. As almost all the stories point out, the main brake on the drop in property values was the sudden surge in sales of luxury condos in the major cities. If you discount those sales, much of which is being spurred by overseas investors, the drop in value is pretty much the same as it’s been for the past decade or so. In Asahi Shimbun’s coverage, a reporter talked to a 37-year-old salaried worker who was looking to buy a used condominium in Ichikawa, Chiba Prefecture. He found one that was very cheap and only 10 minutes from Motoyawara Station, but was disappointed by the “undeveloped” quality of the neighborhood. A local realtor told the reporter that his business has not changed at all. Property values in the area are 4.7 percent less than they were a year ago, when the values were 4.4 percent less than they were in 2011. “The only place that’s any good is the center of Tokyo,” he said.
Another realtor in Kofu, Yamanashi Prefecture, told the paper that the value of properties near the main train station declined 3.8 percent over the previous year, and he didn’t sound hopeful, citing the fact that there has been no increase in the last year of “inquiries for home remodelings” that actually lead to contracts for work. “That’s because nobody’s income has increased.” The media was expecting a rush on home sales prior to the increase in the consumption tax next April, and until May, housing starts rose year-on-year for nine months straight. That statistic may go south, however, since there is a suspicion that interest rates will also go up in line with the government’s monetary easing policy, thus discouraging some potential new homeowners. Almost everyone Asahi talked to, from realtors to securities analysts, believe that the situation won’t change significantly unless average people start making more money.
Here is our latest Home Truths column in the Japan Times, about mobile homes in Japan.