Dead houses

In the last year, we’ve seen a lot of headlines on social media about how you can buy a house in Japan for a song. The usual figure quoted is about $500 US, which makes us think that all these articles spring from one source that’s likely American. We haven’t bothered tracing the articles to one source, though we read a few of them and they all say basically the same thing: local governments throughout Japan are promoting the acquisition of abandoned houses in order to get people to move into their regions and lift the tax base. In some cases, they are even giving houses away, but in any situation these structures will need a lot of work before they are at all habitable. We’ve written extensively about the problem of akiya and since you get what you pay for it follows that the lower the price the more work that will need to be done. The worst akiya, it must be said, are not even on the market, meaning they were literally abandoned by the owner for any number of reasons—either because they moved out and couldn’t be bothered to try and sell it, or they did try to sell it with no success, or they simply disappeared in order to avoid having to pay property taxes, which, in all probability, were very low to begin with. Or they died—with or without an heir. There are a lot of akiya whose owners are dead, meaning they never transferred the title to anyone, and though heirs are still legally responsible in Japan they can be difficult to contact if they don’t want to be found. Those houses are probably unihabitable since they’ve been left to rot, and the local government doesn’t want to spend the money to have them demolished.

There are more than 8 million akiya and, not counting dedicated rental units, many are not livable and fewer are even sellable due to other factors such as location. So when you read an article about somebody who bought a house for nothing and fixed it up into a nice place it’s not just an exception to the rule, but almost an anomaly. Anytime a foreign person buys an old farmhouse or kominka and turns it into a monument to traditional Japanese craftsmanship they’re bound to get it featured in the news, but, again, it’s exceedingly rare. Most people prefer new homes, and because government policy has always privileged new house construction, potential buyers can always find something they can afford that’s new; and in many cases it will even be cheaper than an older house that requires extensive renovation, which describes a substantial number of old houses that are on sale. 

The reason these articles about cheap houses have proliferated in the past year is mainly the pandemic, which, for a while, cut into new home construction. People are moving out of the cities because they can now work from home, so used houses starting selling well, but, again, a lot still aren’t selling. We know of several houses in our general vicinity that are in good condition but they’ve been on the market for months, some even years. There are just too many cheap old houses that people want to sell and not enough buyers. Of course, much of it has to do with Japan’s decreasing population, but mainly it has to do with oversupply. When construction resumes apace, those old houses will become even more difficult to sell. 

More to the point, people who do sell their homes almost never make back what they paid for them. The exception is certain areas of big cities, but even in those cases it isn’t guaranteed, and then the seller will be even less likely to see a profit, especially when you factor in the interest they paid on their loan. (You’re more likely to make a small profit if you bought an old condo in a popular area of Tokyo and resell it later.) At this point, we think most Japanese people know this, despite all the talk about “maintaining property values” at all cost. We certainly know it. Almost as soon as we moved into our new house in 2014 the assessed value dropped by almost two-thirds—and that’s for property tax purposes, which tends to be higher than market assessed value. (Assessed value for land is a different matter) So we know we will never be able to make money on this house, which is one of the reasons why we had it built the way we wanted—meaning few other people would probably want it. But the problem as we get older is: What can we do with it when we reach the age where we can no longer live here? There’s a very good chance we won’t even be able to sell it. Since we don’t have children, there’s no one to inherit it. We’ve already brought up the possibility with some younger relatives that any of them can have it for free, and while they sound interested, we’re not sure if the idea of taking on a property is something they have the wherewithal to carry out. We’ve even thought of donating it to some organization, but that might run into problems with neighbors who find out about it beforehand. 

In the end, we may become one of those homeowners who slips away in the middle of the night and leaves their house to the weeds and the snakes, which is how we became obsessed with the blog, urbansprawl.net, by a former bus driver named Yusuke Yoshikawa, who studies and writes about “genkai new towns.” Yoshikawa’s use of the term “new town” is broad. Usually in Japan, new towns are planned large-scale residential-commercial development projects carried out by a prefectural government or, in the past, the central government in concert with private developers, but Yoshikawa uses it also to describe medium-scale housing developments, some of which were initiated by local governments. More specifically, these housing developments stalled due to lack of capital or interest. He visits them and describes the effect on the community. Suffice to say there are akiya in these developments, not to mention vacant lots that were never built upon and which are now covered in weeds and sometimes illegally dumped refuse. 

Though Yoshikawa’s posts are informative, what really makes the blog is the photographs, which ably illustrate the real situation of Japanese housing outside the big cities: houses that look in tact from the outside but which are sitting among tangles of vines and weeds that often extend up the walls and onto roofs and balconies. Apparently, in some cases the vegetation invades the house itself and runs rampant through the rooms. Some houses have partially burned down and are then left that way for years. 

A problem that Yoshikawa often encounters on his field trips is lack of boundaries and borders. It’s very difficult to tell where one property starts and another begins, and not just because of a lack of physical markers. Apparently, in many cases the boundaries are undetermined because the developer simply carved up the tract for sales purposes but never properly had the development surveyed. It’s a problem we have also written about and which is particularly acute in these new towns. What that means is that anyone who does buy a property and wants to find out exactly where the borders are will not only have to hire a surveyor, but also communicate with surrounding property owners to gain their permission and cooperation, which, in most cases, is almost impossible. Consequently, it is even more difficult to sell these properties.

But people try. Recently, Yoshikawa was the subject of a video documentary on a YouTube channel run by a real estate company. For the documentary, Yoshikawa chose a danchi (housing development) in the city of Narita, which isn’t far from where we live, though he’s careful not to name the development and the video crew blur out identifying factors. The development contains 150 houses, of which 15 seem to be abandoned. The road to the “entrance” of the development is steep, meaning it was built on a kind of plateau that used to be a field. Yoshikawa points out that in the 80s and even the beginning of the 90s developers would buy anything, and farmers in these parts were happy to sell unproductive land if they were allowed to. The land had been cleared, lots drawn up and sold, and those owners who wanted to live on their lots had homes built, probably through the developer. Since the slope faces south, it was relatively easy to sell the lots at premium prices. 

Some of the vacant lots have for sale signs on them with the phone number of a realtor. On more than a few it’s an Osaka number. When Yoshikawa checked this realtor’s home page, the Narita properties are listed with prices, usually less than ¥10,000 per tsubo (3.3 square meters). As he points out, realtors usually don’t handle such low prices because there’s no profit in it for them. He suspects the realtor is running a scam, which is quite common for such derelict properties. The realtor visits an area like this new town and makes note of the lots that look as if they’ve been empty for years. Then the realtor goes to the local government office and checks the registration to find out who owns the land. They contact the owner and offer to be the agent, promising to find a buyer at a good price. If the owner agrees, the realtor then charges the owner fees for “research and advertising,” which usually comes to a few hundred thousand yen. They list the property on their website. Ambitious swindlers might even try to talk the owner into cleaning up the land, for which they take a cut of the cleaning fee. In many cases, the owners being cheated are elderly people who don’t know how to use the internet, and by the time they discover they’ve been fooled, they’ve paid the realtor a sizable amount of money but not enough to justify hiring a lawyer, which would probably cost more than what they lost. In any case, if an owner does sue, the realtor can simply pack up their office and vanish, reappearing elsewhere with a new name. That’s why they go far afield to look for properties.

Also, because these plots were most likely bought for investment purposes, the owners don’t live nearby and probably haven’t visited them in years. Consequently, they may fall for the swindle and pay money without ever really knowing they were swindled. In most cases they probably don’t even know what the market value for their land is right now. When the video crew calls some of the numbers on the signs the persons on the other end either feign ignorance about the price or say outright that they charge a fee for trying to sell the land but don’t guarantee that they can do so, insisting that they make the owner understand these conditions. Another realtor, who says they are trying to sell the plots at real market value, complains about the swindler companies, saying that they make it impossible to sell those plots, thus preventing that land from being used to benefit the community. 

At one point, Yoshikawa talks to an elderly resident of the area driving by in his car. The resident says that everyone who lives in the development is old. “No young person would ever want to live here,” he says. Yoshikawa has covered about 100 genkai new towns, and in most cases, they date from the high-asset bubble period of the late 80s, when prices for both land and structures soared with no ceiling in sight. People bought anything they could get their hands on in the belief that the value would continue to go up, but after the bubble burst in the early 90s the value plummetted and never rose again. As noted, many of the vacant lots he inspects have owners who bought them as investments but could never sell them; or, at least, not for the price they want. 

Once when we wrote an article about how housing is not an asset for most homeowners in Japan, the editor for the newspaper we work for rejected it because he didn’t believe it was true, even though we included lots of refererences from other publications that said as much. His feeling about those references was that they were only talking about properties bought during the bubble. Prices at that time were impossibly high, so of course people weren’t going to get what they paid for when they sold their house, but that’s no longer true. This particular editor owned a condo in Edogawa Ward, Tokyo, which is currently very popular among families, and he insisted the value of his condo has gone up since he bought it, which may be true, though, with demographics changing they way they are in Japan, it’s difficult to imagine it will retain its value into the far future. It certainly isn’t true for the vast majority of single family homes that have been built over the last thirty years. 

In any case, we don’t think our house will, and after reading urbansprawl.net we can imagine our whole neighborhood being repossessed by the surrounding forest in decades to come. It’s an odd feeling to project that you will be the only persons ever to live in a house you had built. Some people might actually find it comforting, in a way, but to us it’s a bit creepy. 

Supplemental articles about akiya:

From Sept. 2014

From Dec. 2016

From March 2020

13 comments

  1. fireminer · August 4

    Thank you so much for writing this informative article. I would like to ask a question though: Has any local government proposed or enacted any plan to reclaim these abandoned houses, even if just to tear them down? From my experience, old houses can be a source of environmental hazzard, especially if they use certain types of construction materials.

    Secondly, is there any attempt, even just academically, to connect the problem of abandoned house with homelessness? In other word, are there YIMBY in Japan? I know vaguely that the Japanese government has a program to encourage young people to move to the sparsely-populated rural areas.

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    • catforehead · August 5

      Many local governments have tried to address the akiya problem, but it’s difficult due to legal and economic obstacles. It’s very hard in Japan to move against private property without some agreement from the owner. A few local governments have enacted regulations that force owners to demolish derelict buildings but if the owners can’t be located nothing can be done. And there are some who will proceed with demolition themselves if the owner can’t be located after a certain amount of time or the owner refuses to act on a complaint, but it costs a lot to tear down a building and remove the refuse, and most local governments have serious economic shortfalls.
      As for connecting homeless people with old buildings, it’s not something the public sector is very enthusiastic about. We’ve read about NGOs carrying out such programs, but on a very small scale. There are too many regulatory and social obstacles (disapproval from neighbors) involved.

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  2. Lee · August 5

    Hi, another great article.

    Yes, another example of foreigners writing about Japan and having little or no understanding of the underlying market or conditions.

    When buying a real estate property in Japan one should look at it as “paying a fixed rent in advance” (the cost of the property amortised over the period of occupancy) with the expectation that you will more than likely never get back what you paid for it unless you buy some kind of property with special characteristics.

    That being said, buying a house in Japan is cheap compared to many other countries and with the low interest rates on loans it can be a better situation than paying rent.

    Buying a condo or the typical Japanese “mansion” is a totally different story with those generally depreciating in value faster than houses.

    IMO that type of property will be the biggest source of real estate market angst in the coming years in Japan.

    (And as an aside note, our suburb here in Melbourne is having its first multi-storey condo built ….all two stories in fact!! And just to show how different the real estate market is here from Japan, Melbourne’s median house price is now just over A$1 million. And as of the result of the pandemic and lock downs imposed here people have been flocking to regional areas pushing up house prices and rents by 20 percent or more over the past year.)

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    • catforehead · August 5

      Yes, buying a good house in Japan is relatively easy, both in terms of money spent and administrative hardship, but only as long as you go through the expected channels, meaning you buy through a developer or housing company. Buying a used property is bit more complicated, which may be by design, since promoting new house sales is an economic priority for the government. And by no means are we trying to discourage people from buying a home; even if your house (as opposed to your land) loses value very quickly, it at least gives you more security in terms of having a roof over you head than renting does. But people should know what they’re in for in the long run.

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  3. Sean · August 6

    I would push back a bit on the idea that buying used is necessarily more complicated. I bought a used house (10 years old when I bought it in 2016) and the process was quite smooth and easy. I guess experience might vary though. Cost wise buying used just made way more sense, I wouldn’t have been able to afford the same house I bought if I had paid what the original owners had when it was built. And at just 10 years old there really wasn’t anything physically wrong with it that would justify the steep depreciation, its just a form of irrationality built into the market here.

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    • catforehead · August 6

      When we said more difficult we meant compared to a new house bought from a developer, who will do everything for a sale, including securing a loan and filling out all the paperwork. We’re curious as to what percentage of the original price of the house you paid after ten years. As you said, after ten years not much is probably wrong with it, but we’ve found that Japanese homeowners don’t really keep their places up over time, since there isn’t a strong tradition of resale, and houses we looked at that were 20 years or older could be really run down. Most of them needed new roofs, for one thing.

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      • Sean · August 6

        Yes, we looked at some places that were 20+ years older and they all would have required significant additional investments, which is why chose the house we did (used, but not too used). We actually didn’t buy our house directly from the original owner, but rather through one of those companies that specializes in renovating and re-selling used houses. So the house had been re-painted on the outside, re-wallpapered on the inside, had its bathroom and kitchen fixtures replaced, new AC installed and the place was fumigated. So cosmetically at least it looked “new” (and there weren’t any structural issues with it, after five years living here the only cost associated with it being used we are looing at is the need to replace the gas water heater, which is at about the end of its lifespan right now). Even after the costs of those upgrades were worked in by the seller (and whatever profit the company was taking as well) the price we paid was just over 70% of what the original owner had paid for it a decade earlier (we live in the suburbs of Nagoya) .

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      • Cookie Tannenbaum · August 15

        I don’t know about the suburbs of Nagoya, but even in nearby Tokyo suburbs in Saitama the land for a new construction house can be assessed at more than three times the structure, so building a new house, or even tearing down an old house (about 800,000 yen cost) and building a new house is not that much more expensive (total price, including land) than rehabbing an older house.

        The land is what costs you, in urban Japan.

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      • Sean · August 17

        About the cost of used housing, if we are talking about buying a really old house that needs extensive work then yeah, most times you’d be better off building from scratch. If you buy a house that is 10 years old or so like I did (which today would mean one built around 2011 or so) the savings are quite significant compared to buying or building new though. A house that old doesn’t need much reform work so those costs are small, but the decpreciation on the value of the house is already quite a bit so they can be had quite cheaply compared to a new home with similar features, location, size, etc.

        The real trick of course is finding a used house that isn’t, for lack of a better word, horrible. Especially in Nagoya about 99% of the properties we looked at (mainly online, some in person) when trying to find a place were just so awful looking that the thought of living in them for the rest of my life was such a dystopian nightmare that it made me feel physically ill.

        I kind of wish the listings on Suumo had a way of filtering out those listings. Like they could put a checkbox with “Not so ugly that the mere sight of it will put you at risk of developing severe depression.” I guess the fact that doing so would eliminate almost the entire stock of contemporary Japanese residential housing from their listings has prevented them from doing so.

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      • catforehead · August 17

        As we’ve written in the past, houses built after about 1995 tend to be reliable in terms of price and fixability. The problem is their marketability. There are just so many cheap new houses on the market that selling a good, relatively new house becomes more difficult. By all means, people should buy older houses in good condition, since they are bound to be very inexpensive, but don’t necessarily expect to be able to resell it at the price you bought it.

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  4. Cookie Tannenbaum · August 15

    It costs JPY 2,000 to get the property records from the houmu-kyoku, for the improvements, and the same amount for the property, although the owner is the same in 99 percent of the cases. So 2,000 yen times all the abandoned houses in a neighborhood is a big of an investment for a speculative scam.

    The city can give you a map with the surnames of the owners, but I think you need the houmu-kyoku property records for the full name and mailing address.

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    • catforehead · August 15

      The scam described in the video is for vacant lots, not abandoned houses, the idea being that the realtor will become the agent for the sale (which they won’t pursue vigorously) and then charge the owner lots of fees.

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