That first step is a doozy: First world elderly problems.
Here’s a fairly common retirement strategy: The kids are gone and have families of their own, so the house you bought so long ago and which is likely paid for by now becomes too big, so you sell it and use the money to buy a condo somewhere in or near an urban center where public transportation and retail resources are easy to access. However, a recent feature in the weekly magazine Shukan Gendai warned people who are thinking of doing this to think twice. It may not be as easy as you think, and, in fact, it could end up being a disaster.
The number of people in Japan over the age of 65 recently exceeded 35 million, an expanding demographic that has become a target for real estate agents who are selling used or new condos, which tend to retain their value more readily than single-family homes. As it stands, many of these new retirees probably live in single-family homes in the suburbs of large cities to which the heads-of-household used to commute. These houses are likely two stories, a structural feature that becomes more of an inconvenience the older you get, and they are also probably far from public transportation hubs, meaning the people who live in them require a car to get around. Realtors use such reasonings to convince people to sell their homes and buy condos, and it makes sense, but not as much sense as it used to. First of all, there are just too many single family houses on the market and not enough people who want to buy them, and that disadvantageous ratio will only get worse as the population greys further.
Gendai also brings up the magic amount of ¥20 million, which is what a retired couple should have in savings to supplement their pensions. Actually, ¥20 million is probably not enough unless the couple is able to invest in some kind of financial instrument that can guarantee a small income, but most people still have their savings in time deposits, which generate almost no income, so the thinking here is that the couple lives off their pensions and doesn’t touch their savings since they may need it for emergencies. It’s a precarious way to live.
Gendai is actually quite generous by suggesting that a couple can probably sell their house for, again, ¥20 million (likely they paid twice that much for it, not counting the interest on their mortgage), and then they can use that money either to buy a small condo or rent one. But as Gendai points out, even if you found a condo you liked for ¥10 million (very difficult if you want to live in Tokyo, though it’s possible on the periphery), you’d still have to pay monthly management and repair fees, which could quickly use up all the money from the sale of your house. If you decide to rent, how much do you think you can afford? If you’re buying should you take out another loan? What about caregiving costs in the future? All these items must be discussed, and the best thing would be to hire a financial planner who can look at your situation and make some kind of guess as to what the couple can afford and for how long.
But the financial planner that Gendai talked to, speaking generally, seems to think that most retired people should just stay put, and not just for financial reasons. Though your old house may be too big and need some renovation, moving out at an advanced age can be traumatic. You would be leaving behind a community that you know, and which knows you, for an environment that is not familiar. A real estate consultant tells the magazine much the same thing. He only recommends the sell-and-buy scenario to people who have saved a lot of money and who are financially very well off. (The article does mention old age communities and nursing homes, but rightfully implies that only the very well-off can afford them in Japan. They don’t mention public care facilities at all, which are beyond the pale since they tend to be for the bedridden.) There are too many things that can go wrong if your plans are based on a limited fixed income. He’s seen older people of limited means settle on a rundown condo and become frantic trying to make it livable. Many elderly people end up living in older condo complexes with lots of vacant units, which can be a dangerous situation.
Dangerous in what way? Again, it has to do with community. Based on our own experience, community solidarity is more pronounced in neighborhoods where people feel they have a long-term stake in the matter. Condo complexes, even those where the residents are all owners of their units, are more likely to lack this kind of solidarity, despite the existence of homeowners’ associations. And, obviously, the more vacant units in a building, the fewer people to bond with, so as a retired couple or individual gets older, they become more isolated. Gendai reports that every year some 30,000 people die alone in their homes—a situation called kodokushi—and many aren’t found for days or even months. A notary public interviewed by the magazine says the major reason why this kodokushi problem is increasing is not just due to the greater number of old people, but rather because these people are no longer connected to their communities. A scholar says that without close relationships with neighbors, elderly residents of condos are much more likely to become hermits. If a health emergency happens, no one knows.
A related article that appeared in the Feb. 7 Asahi Shimbun reports that 71 percent of the kodokushi cases in Osaka Prefecture last year were people over 65, and police say that in 382 cases the bodies were not discovered for at least a month. The number that weren’t discovered for more than 2 days was 2,996. The article goes on to say that there is still no legal definition for kodokushi and that the central government does not keep nationwide data on the phenomenon—the 30,000 figure seems to be an extrapolation rather than the result of surveys. Local governments tend to have their own definitions, or no defintions at all. Osaka simply says that 12,309 people died in the prefecture last year “not in hospitals from natural causes” and not due to suicide or any discernible criminal activity. In addition, three times more men die alone and undiscovered than women who do. And 2.4 percent remain unidentified in the long run. The Nissei Research Center found that Tokyo, of course, has the highest number of kodokushi cases followed by Osaka, and that within Tokyo lower income wards produce higher numbers of kodokushi than higher income wards. This is one of the primary reasons why landlords don’t want to rent to elderly people, so the fact is even for those who insist on selling their homes and moving to the city to live out their twilight years, unless you’ve got the cash for a condo, you may not be able to find a place that will have you.
Cat Foreheads & Rabbit Hutches 
Wait, you can buy a house for ¥20 million? My 40-year-old house in the Nagoya suburbs cost ¥32 million and took a lot of looking to find.
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Where we live, about an hour east of Tokyo, you can buy a new house for ¥35-¥40 million. 40-year old houses out here go for between ¥10 and ¥20 million, depending on the distance from the station. There are quite a few, and most need a lot of work.
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That is a very scary scenario. Kodokushi is a real thing. We’re a childfree couple so the best we can do is to create solid ties to our community to prevent that.
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I can fully agree on the importance of a good local community. Where I live, all of the house owners nearby know each other and greet each other when we see. We also work closely together in the chonaikai (neighbourhood association). However, those people who rent in our neighbourhood are basically ignored. They ignore the house owners, and vice versa, with few exceptions of a few renters who have lived here for more than 20 years or so, and how have made an effort to become part of the community (in most cases through the chonaikai). So it is the long-term people who make the community.
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Good points by Oliver. Though I think neighborhood assocations can be very positive, as a foreign renter I have to say that in Tokyo I don’t have any desire to pay money to the local women in my area.
I lived in different prefectures before in Japan, I felt pressured in my first one to pay the fee as I was the only foreigner in my neighbourhood but as an unmarried foreigner I did secretly resent paying for the benefit of the families around me, some of whom never looked to speak any greeting.
This area was not inaka but certainly not the city.
The locals never thought that unmarried people with no kids might not like paying for the children of people they didn’t know to go on social activities.
Especially as a foreigner it was taken for granted that I would pay but ‘naturally’ was an outsider. I often thought how a Japanese person would feel in my home country if the locals appeared at their door to collect a monthly fee that was then spent on activities irrelevant to them. With minimal attempts at any real communication.
Especially as the household pays so a household with working children with salaries and parents with one or more salaries doesn’t pay more but a single household occupant pays the same amount.
The second location was better in terms of communication but in a similar area, the demands that I pass around the group newsletter and do various things didn’t worry me until I realised that my neighbors knew too much about things that were really not their business.
My employer had the right to know when I was going on vacation but my neighbours should not have unless I was friends with them and wanted to tell them.
I didn’t as we were not friends but the obligation to do various things as well as pay fees meant that I had to tell people I didn’t really know when I was going on vacation etc. This system seems designed to know the whereabouts of everybody and I bet it developed pre World War 2 when Japan was exerting far more control over its population.
Now in Tokyo I ignore the doorbell when I hear local women come up the stairs. They are the neighborhood association reps but I don’t want to and I won’t pay the fee.
There’s not the same pressure as in the areas I lived before and I am not going to pay a fee so local children can go on a day trip or housewives or old people do something.
I’ve heard them wonder aloud why I don’t answer and I’d love to tell them it’s because most Japanese people in neighbourhoods only want to talk to foreigners when they want money for some purpose from them.
And when I tried to find somebody to talk to about a previous neighbor who allowed his trash bags to be ripped by crows, the gomi scattered all over the road near my apato and I was always cleaning it up because he did nothing, nobody was interested enough to answer their door to the foreigner.
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Always interesting articles to be read here.
No chance in moving to live in Japan again, but I still look at the various real estate web sites to see what is for sale.
There are some very interesting houses that have been built in Japan and can be bought at a variety of prices points . From multi-million dollar houses in Yokohama and Kamakura to quite reasonable houses in Chiba Prefecture. Even Hokkaido has houses all over the price spectrum.
The ‘plan’ for us when we thought of moving back to Japan was to buy one house in Honshu (Shiga, Kanagawa, or Chiba) and then a ‘summer’ house or condo in Hokkaido.
I also look at the various ‘mansions’ (condos) that are for sale and again one can find them at a variety of price points all over the country. While there are many really nice condos for sale and some at quite reasonable prices with huge areas under roof, the big turn offs for these types of properties is, as stated in the above article, the monthly sinking fund and management fees.
The fees really vary and also vary by the type of fee being charged. One particular branded condo stands out with their ridiculously high fees. These fees are often so high that you’d probably end up paying more in total in these fees than the purchase price of the condo over the ownership period!!!
The fees also vary quite a bit by geographic area area. For a look at really high fees take a gander at the fees for condos in resort areas – Atsumi’s are ridiculous.
And then there is the dreaded probability of having to fork out a big amount of money in an additional assessment for some major renovation that was not programmed into the condo’s sinking fund. These assessments can run into the millions of yen.
And of course there are taxes. Taxes and fees when you buy and yearly property taxes. Taxes on real estate in japan are probably one of the most baffling in the world.
In Japan one can find very good priced and what can be considered ‘cheap’ real estate compared to many countries around the world. Here in Oz the median price of a house in Sydney is now around A$1.2 million. Melbourne is just under A$1 million.
Where I live that price might get you a new townhouse on 300 -350 square meters of land or a knockdown house that may or may nor be able to be lived in. Places are here look just like Japan with houses being knocked down and three townhouses being built on a 1000 square meter block
The price of living here is much higher than in Japan. Food, electricity, natural gas, and taxes are all higher. And while we are safe comapred to many other countries around the world, we aren’t japan. Public transport here is terrible, but there are some discounts for time of travel and old folks.
Reading about real estate prices and property around the world is interesting and one can see what is available and at what price and how government actions can make or break an investment. (Hawaii is one state that has totally wrecked it for many with its many taxes, laws, and regulations……………)
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