Back to the land (3)

CIMG2494Having 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.

But one piece of land caught our eye. It was ¥5.3 million for 220 square meters located not very far from where we live now. The price and proximity were attractive enough, but on closer inspection we realized that we had actually inspected this area almost two years ago, not long after we moved out of Tokyo. At the time, we were writing a column about manufactured homes sold by large companies, and had visited the local showroom of Tama Home, pretending to be interested in one of their models. During the discussion the salesman asked us if we had a lot to build on and we said we didn’t, so he hooked us up with a realtor. Most of the plots the realtor suggested were joken-tsuki, meaning there were “conditions attached,” the main one being that if we bought the land we’d have to put a Tama Home on it. We weren’t going to do that because Tama Home products were too expensive and elaborate for us, but we did let the realtor show us a few plots that were in the lower price range just to see what was available. One was located in a small subdivision of about six plots tucked away in a bamboo grove between a dense forest and an agricultural zone. At the time no houses had yet been erected in the subdivision and the tract was still being prepared. The plot that Tama Home had bought cost more than what we were willing to pay. We never thought twice about it.

CIMG2491Until now. As it turned out, all the plots in the subdivision had been sold except one. It was on the eastern side of the development facing the bamboo grove. The portal ad didn’t give the address but we knew where it was based on other information supplied. It was a mere 10-minute bike ride from our apartment, and looked completely different from what we remembered. Five houses had already been built in the development, with four other plots sold but empty. The one still for sale was oddly shaped, which may have explained why it hadn’t been bought yet. The outline described a right triangle, with the hypotenuse facing the bamboo grove to the east and the shorter leg running along the public road to the south, which was about 4 meters wide. The longer leg faced the other houses and empty plots of land. The driveways for the two properties closest to the unsold one ran along the longer leg, thus affording a certain amount of guaranteed distance between any structure built on the property and the neighboring houses. Of course, given the shape of the plot, the size of any house built on it would be limited, but we were intrigued, since we could envision a house there that would not face any neighbors to the north, east, and south.

We went home and looked at other portal sites to get more information and found that it wasn’t available anywhere else. According to the site where we found it, the owner of the land was a local realtor, which made it even more intriguing. If the land is being sold by a realtor, then the realtor isn’t going to charge a 3 percent sales commission, which means the ¥5.3 million would pay for everything. We called the realtor and made an appointment, but before the meeting we tried to find out more on our own and quickly figured out why the land was so cheap. Though the tract was technically a subdivision, albeit a very small one, it was not a “development” in the strictest sense. There was no sewage or waterworks, which means anyone who built a house there would have to dig a well and install a cesspool. A quick survey of well-diggers in the area revealed that it would cost ¥400,000 to have one put in. A cesspool would be about the same, but as it happened the city offered to reimburse anyone who installed one, but there was a limited budget for such subsidies in a given year so if the fund had run out by the time the homeowner applied he wouldn’t get it. We could be looking at an extra ¥1 million if we built a house on the land.

We met the real estate agent, a tall young man with flyaway hair, at the plot on an overcast afternoon. Most of what he explained to us we had already found out ourselves–about the well and the cesspool, and the vague designation of the land itself (shigaika chosei kuiki, or “area in the process of being adjusted for urban use”) that meant we would have to receive special permission from the local government to put a house on it–but he also pointed out that the eastern border, the leg of the triangle that faced the grove, was an “akamichi,” a “red road” reserved by the local government, even though it was nothing more than an overgrown path. What that means is that nothing can be built there. As for the well, he said his company would find one who did the job for a reasonable price. He also informed us that the lot to the northwest which had been sold and remained vacant would continue to remain vacant since it had been bought by the neighbor to the west, a carpenter who planned to use the land to store materials and equipment. We came away from the meeting more interested than when we had arrived, but we also assumed there were many more things we didn’t know.

CIMG2524As it happened, the next day we had an appointment to inspect a condominium in Sakura in a complex we had seen before. Previously we had seen a unit that was dark and too small, but we liked the complex itself and had told the local agent that if any other unit came on the market to give us a call, and he did. This one was sunnier and larger than the one we’d seen earlier, and located on a corner of the building, but it was about 18 years old and the carpeting and wallpaper would have to be replaced at the very least. Since the asking price was already ¥16 million, we estimated that it would cost at least ¥20 million just to get the place in a state we liked. A state we liked. That concept dominated the discussion when we got home. We had been gradually moving toward the acknowledgment that our budget was too low for the kind of place we wanted to live in, but we had always assumed that an older place would be more sensible, since there were so many on the market dirt cheap. But once you factored in the cost of renovation to a “state that we liked” the price was already higher than our budget. And in truth, almost all the used places we’d seen over the years would never be in exactly the “state we liked,” no matter how much money we spent. Almost on cue the realtor called us and asked what we thought of the condo. We said it would have to be renovated and he said he could probably have the seller pay for the renovation, but we knew what he meant becuase we’d been here before: the minimum amount of renovation, which was no renovation to us. We later sent him an email saying we weren’t interested.

We had also sent an email to the builder in Ibaraki that we had wanted to use if we ever actually went ahead and built our own house, attaching photos of the land we had inspected. We received no reply right away and called several local builders, asking them if it was possible to build a house on the land we had seen (interestingly, they all knew it) for ¥10 million. One said yes, it’s possible. Then, the realtor with the flyaway hair called us and asked us if we were still interested, adding that “we’ve received many inquiries about the land.” He was obviously trying to prod us, and it worked. We talked about the cost of putting a house on the land and he said he would introduce us to an architect who could design a house to our specifications and within our budget. Moreover, he said if we wanted time to think about, all we had to do was put down “holding money” in the amount of ¥100,000 and they would not show the land to anyone else for a month. If after that time we decided not to buy, he would give us the money back in full, no questions asked.

The next morning we read with alarm how much the Japanese stock market had lost the previous day. Whatever else we were going to do with all the money we had saved in Japan for the past 25-plus years it seemed pointless to save any more, so even if we had to borrow to build a house, it was better than trying to invest it in something that wouldn’t provide any sort of return. We hadn’t received a return since 1995. We still had serious reservations about buying land, but we went to the realtor and gave them ¥100,000 in cash.CIMG2490


  1. Miura Anjin · July 15, 2013

    I love this blog.

    Quick note: we were shown a triangle piece of land recently that I thought was perfect. My (Japanese) wife did some research and told me that there is a kind of philosophy (similar to Feng Shui) in Japan that holds that triangle plots are very bad luck. Sadly this matters to my wife so we will not be buying it. It might explain why that land you’re interested in is still available.


    • catforehead · July 15, 2013

      Nice to know. Maybe we can talk the price down.


  2. /mek · July 15, 2013

    I am confused; what is the purpose of the “holding money” if you can get it back for whatever reason?


    • catforehead · July 15, 2013

      The money is not a deposit, it’s proof that we are serious. Often when the real estate agent is the go-between, he/she asks for “moshikomi-kin,” or application money, which means the realtor will negotiate with the owner on your behalf, but the money is returnable if the negotiations don’t work out. This holding money seems to be the same idea, and we think it’s a good one. It gives us some breathing room to decide whether or not buying this land is feasible for us, since we have to look for builders and find out if we can borrow money, all of which takes time.


  3. Choko · July 16, 2013

    Nice find! You’ll be much happier building something you want from scratch than renovating some outdated rabbit hutch or “mansion.” I say go for it!!


  4. Choko · July 16, 2013

    Would be insanely grateful if you did a post on zoning/land designation in Japan. One guy I know bought land inside a national park and found there are no building inspection/codes that apply to him as long as he keeps to a certain size/height. My fiance’s father is giving us a bunch of land her grandfather accumulated during the bubble era and one of the larger tracts is a former campground (it’s literally on the beach and on the other side of the coastal road…the problem I’m having is the crummy record keeping (no map of the area or makers) and figuring out what the land is designated and if it’s possible to re designate it to build on.


  5. Troy · July 18, 2013

    I think your bargaining power is greater without putting down the “holding money” — to win a negotiation you’ve got to be willing to walk away.

    Plus I’ve heard enough rotary saws in the AM to not want woodworker neighbors.

    Even if Abe succeeds in getting inflation going, that’s no guarantee that Japanese households are going to have more money available to bid up the price of property — if inflation hits food and other import costs, consumers will have even less money for rents and home valuations.

    Looking at the demographics, Chiba is beginning its population decline, and Tokyo-to is scheduled to start in 2020. Fewer people is also not inflationary for housing.

    But paying rent every month waiting for a ¥5.3M asking price to start falling isn’t that economic, either I guess.

    ¥5.3M for 220 meters is pretty ridiculous though. If all of Chiba had that valuation that’d be a total of 124 trillion yen in asset value, ~10% of Japan’s national debt. (!)

    Land economics are so whacky. Don’t get me started on the real estate industry itself . . .


  6. Josh · August 16, 2013

    Hi Phil,

    I want to chime in with other people here and say how much I appreciate the work you and your wife have put in relaying your experiences in the Japanese housing market. Fascinating and learning a lot, Keep up the good work.

    I find the home value depreciation issue fascinating. I’m still surprised that people are will to splurge so much on new homes in the primary market when there’s every indication from the 20-year trend that it is a losing gambit unless they intend to live in the residence the rest of their lives. Yet, from your own foray into the secondary market the picture is indeed rather grim. I actually found your blog via searches of pages on the vacant home issue in Japan. It certainly has helped put some perspective on the issue of home value depreciation.

    As to your own situation, the one thing you could consider when designing your own home in at least attempting to inject some manner of value into it by innovating the design. I am honestly shocked looking through your blog roll at all the pictures of Japanese homes how dull and drab and predictable the overwhelming majority of the layouts are. The homes seem to exude a sense of resignation.

    I understand your budget limitations, but there are a lot of things you can do within the constraints of a budget that will make your house not only more liveable, but attractive. Thinking “outside the box,” literally and figuratively. There are some amazing modern homes in Europe that would seem to fit your needs and that would definitely stand out vis-a-vis other homes in the Japan market, and they seem to fit the into the design constraints of an A-1 home design agency. You should really look into it.

    Good luck and look forward to your next installment.


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