Here is another draft chapter from our unpublished book about our house-hunting adventure. This one is about second homes and so-called resort mansions.
One late summer morning in 2012 we were on the Tokaido Shinkansen super express and ran into a friend we hadn’t seen in years. He asked us if we were still living in Tokyo and we said we had moved some time ago because of the earthquake. He then asked what we were doing on the bullet train and we said we were on our way to Atami on the Izu Peninsula to look at some properties we might be interested in buying. He gave us a funny look. “That would seem to be the worst place to live if you’re afraid of earthquakes.”
True. Just the day before Japan’s Cabinet Office Disaster Council had updated its projections for a major earthquake occurring in the Nankai Trough, the deep indentation in the sea bed off the Pacific coast, and Shizuoka Prefecture, which contains Izu, was deemed the worst location in terms of projected casualties, though, technically, most of those casualties would be in the western part of the prefecture, not Izu. In any case, we weren’t completely serious about buying a place there. Having been frustrated in our search for a home we could afford, we were entertaining the idea of keeping our rental and buying a cheap old fixer-upper in a location with cooler summers. If our income situation worsened and we had to give up renting, then we would at least have a roof over our heads, and if things continued as they had been then we’d have a weekend/summer place. There are plenty of old dumps in the highlands of Tochigi and Nagano, or in the wilds of Chiba that can be had for under ¥7 million, though they’d require another ¥3-5 million to make livable. And during our search we noticed there were quite a few such places in Izu, too, mainly besso (separate homes), which we had avoided so far. Second homes tend to be built in specially designated developments managed by companies that charge yearly fees. Also, besso are usually impractical for year-round living, but since we weren’t necessarily going to be living in one year-round we thought we’d see what was available. And Izu is, as they say, the “Riviera of Japan.” More to the point, it’s cooler in the summer.
We made an arrangement with a realtor in Atami to see two properties in besso areas and one in town. We got off at Izu Taga station on the Ito Line and were struck by the quaint leafy charm of the place. We walked down the steep hill to Nagahama beach. It was a blazing hot day and we were already drenched in sweat when we reached the realtor’s office, which is right across national road 135 from the seashore. The agent who would be our guide had prepared floor plans for the three properties. The one in town we had just found the night before and he had only read our email that morning, so he didn’t have a key. His company was not the main realtor for any of the houses, though they did list them. He had obtained the keys for the two besso but would have to retrieve the other from a different realtor if we wanted to see the interior. We said we’d look at the exterior first and then decide, since it was on the way to the first property.
The drive was instructive. Izu is mountainous, and the roads through this part of Atami were narrow and winding. We were interested in the one town property because it was only ¥5.9 million and had a view of the ocean. It was quite old but far enough above sea level to be out of harms way if a tsunami ever hit the area. Getting to it involved a lot of maneuvering in the realtor’s spanking new hybrid, and there was no parking space. It was an interesting house, two stories shoehorned into a 64-square-meter plot located on a kind of dogleg corner. From the outside it would obviously need a great deal of work but we were intrigued, more by the location than anything else. The agent called his office to have somebody pick up the key.
We then drove up to the first besso area, called Green Hill, which is an understatement. The ads on the various portal sites say the house is two kilometers from Ajiro station on the Ito Line, but we assume that’s two kilometers if you’re a crow. We drove for about fifteen minutes up grades that tested 10 percent in some stretches, and then once we reached the residential area had to meander through narrow twisty roads. The agent provided a constant flow of information that was more entertaining than the usual sales pitches. He told us about the celebrities who lived in the area. “The late songwriter Aku Yu had a large second home over there, but since he died his family has had trouble unloading it, even for ¥40 million.” He also confided that his company didn’t deal much with weekend people. We finally arrived at the property, a two-story house with 78 square meters of floor space on 247 square meters of land. It was in the middle of what could have been any other Japanese housing development except for one startling feature: the view. You could see the Pacific clearly in the distance. There was nothing blocking the vista, mainly because many of the lots on the block were empty. Given that the house was originally built in 1969 this seemed strange. The house had been bought by another real estate company from the family of the previous owner, a man who had recently died but whose main home was in an expensive neighborhood in Tokyo. The new owner was half-heartedly fixing it up. We didn’t have to take our shoes off because the floors were covered with vinyl protectors. The first floor consisted of a large LDK area with sliding glass doors to the south and the east. There was also a bathroom and a six-mat washitsu with mildewed tatami. An incongruous bannister-less stairway led up to the second floor, which consisted of a small room with beautiful old-fashioned wooden sashes and a roka (hallway) that extended along the south side from which you could enjoy the ocean panorama. Behind it was another washitsu, this one of eight mats.
We liked the house and thought the ¥8.5 million price tag reasonable. But the drive up had already convinced us this was not our kind of place. We didn’t have a car and though we would consider owning one under certain conditions, we also wanted to be within some manageable distance from stores and other amenities. Any need for supplies would have to be met with a long, treacherous drive down the hill, and as for getting to and from the station, it would have been a problem. This, we immediately realized, is what besso living is all about.
We asked about the management fee, and it turned out to be only ¥20,000 a year, which is cheap. But then, as we could see, the area was pretty cheap, too. There weren’t many houses on the block, despite its spectacular view. The plot directly north of this one looked as if it used to have a house on it, but now there was only a large tool shed. Apparently, even a shed qualifies as a “structure” for property tax purposes, and whoever owned it was still hoping they could sell it for what they paid for it. That wasn’t going to happen, and the agent offered to explain why with a tour of the other side of the hill, called Minami Atami, which was quite different. There, the properties were all upscale, attached to the side of the hill as if by bolts. He told us that Izu was developed as a vacation residence region in the 1960s by two developers, Tokyu and Seibu. Tokyu mainly developed this side of Izu, from Atami down to Shimoda, and even built a railroad, Izu Kyuko, to serve its customers. Seibu stuck to the other side of the peninsula, starting from around Mishima and working south. By the bubblicious 1980s properties in Minami Atami were going for as much as ¥200 million, and even though their value had dropped by more than half since then, the area was still touted as a luxury second-home paradise. As we snaked our way down the hill we marveled at the engineering—large, awkwardly cantilevered structures jutting out into the air or clinging like vines to woody grades, with parking spaces carved out of rock and long, treacherous wooden staircases connecting them to front doors. Obviously, this was not a place for old people, and the agent said that was exactly the problem. He waved at a fellow realtor who was showing a property to a couple and snickered.
“My company doesn’t do that,” he said. “We deal with natives who feel squeezed out and have no interest in living in the hills.” They scramble for every inch of level ground, which was rare and precious. That’s why land prices were still relatively high in town.
After picking up the key to the house in town we drove along the coast for another fifteen minutes, talking about the real estate business in general. He was always amazed when he looked at the documents for new properties and found that they were being used as collateral for multiple loans. He couldn’t understand why a loan company would approve a worthless property when it had already been used as collateral for other loans the borrower was trying to pay off.
“What are all these companies going to do?” he laughed, imagining foreclosures. “Divide the house up between them?”
It took even longer to find the next property, which, again, was supposedly two kilometers from the train, in this case Usami Station. This one was located on a dead end street with a few houses on it, but the vacant lots were so overgrown they had merged into a jungle. The house was a bungalow with a small kitchen-dining area, two parallel rooms, and a south-facing deck that looked out over the ocean, though there was less of it to see because of the overgrowth. The house to the west was only a few meters away. The photos we’d seen on the portal site had completely misrepresented the house, making it look rustic and cozy. Up close it was cheap and makeshift. In fact, there were three modes of electrical outlets in the house, as if it had been built during three separate industrial eras.
We returned to the house on the dogleg corner and opened it up. The place hadn’t had air in it for a long time and the smell of mold was overwhelming. At first we liked it for the possibility it held. With new floors and walls, the first floor might be comfortable. It had two large windows that looked south and east, and the ocean was visible from the living room, but also anyone who happened to be walking along the street could easily look in. The bath was tiny and we wondered how much it would cost just to remove it and install a shower. But then we went to the second floor. The layout was fine and the large windows let a lot of light into the two rooms, but the heat was stifling. We once lived in a house with a metal roof, and you couldn’t stay on the second floor for more than an hour in the summertime. This felt like the same thing, and replacing a roof is very expensive. The price was ¥5.9 million, which was good for this part of town, but after talking it over with the agent we figured we’d have to sink another 8 or 9 million to make it habitable. It wasn’t worth it. We trudged back up the hill to the train station and realized we hadn’t thought about earthquakes at all.
Not long after we visited Atami, a TV newsmagazine aired a long report on resort condos on the Izu Peninsula, focusing mainly on the Atsukawa Onsen region. The hook for the piece was an advertisement for a ¥20,000 condo—for sale. The reporter visited the CI Villa condo, which is only 20 years old and commands a beautiful view of the sea. He wasn’t allowed to inspect the unit advertised but was able to visit another one of comparable size and age. And while the sale price turned out to be the real thing there were strings attached. The buyer would also have to pay more than ¥3 million in unpaid management and repair fees that had accumulated over the years since the unit was abandoned by its owner and seized by the authorities. The new owner would also have to start paying these fees at a rate of ¥30,000 a month.
As the reporter pointed out after learning all this, the condo is still a bargain. Not only does it come with a view, but the management fee entitles the owner to use the building’s spa facilities, swimming pools, and other amenities. He thought the place was a steal, but as he started talking to local residents and public officials he came to understand why no one was snatching up all these low-priced properties. He recalled a TV drama series that aired many years before and which was set in this particular town. It was a huge hit and sparked a travel boom to Atsukawa and in turn a construction craze. About half the residences in the region were built after 1975, with construction peaking during the late 80s. The average price of a condo in CI Villa when it was new ranged from ¥40 to ¥50 million.
Of course, the end of the bubble finished all that. One local merchant estimated that the number of tourists who come to the town is about one-hundredth what it was during its peak. And as more and more businesses that relied on these tourists left, the town fell into disrepair. Many people, it seems, do come with an eye to buy property, most of which is in good condition, but once they see the boarded up shops and derelict infrastructure they get discouraged. The mayor said that the year-round population had aged even more quickly than the national average, and that public assistance had increased sixfold since 1990. Because the tax base is so small, the town can’t keep up appearances. It’s a vicious cycle. One solution would be to exploit the region’s hot springs to produce and sell geothermal power. The temperature of the onsen approaches 100 degrees centigrade, and since local inns only need 50 degrees, the town thinks it could transform those wasted 50 degrees into revenue. The problem is that inn owners, who constitute the biggest block of business, are wary of geothermal, mainly because they think—wrongly—that it will sap the area’s long-term onsen capabilities. One, however, told the reporter that maybe if tourists knew about the geothermal experiment, more would come out of curiosity and a desire to support such an environmentally effective project. That, of course, is the job of TV shows like the one we were watching
In 1987, when land and stock prices were on a bender, the government passed the Law for the Development of Comprehensive Resort Areas, the idea of which was to make the development of leisure facilities a national project. Developers and local governments were given financial incentives, and property laws were relaxed so that more holiday-oriented projects could be carried out. One of the outcomes was the invention of “resort mansions,” condominium complexes that were built in outlying areas where city folk could spend their vacations.
Many of these complexes were built near ski resorts because the late 1980s also saw a huge increase in winter sports activities. About 18.6 million Japanese took up skiing as a hobby in the late 80s. By the time we were scouting Atami the ski demographic has dwindled to an estimated 7 million enthusiasts, and there were a lot of vacant condominiums as a result.
A different TV news program in 2012 visited the town of Yuzawa, which is next to the Naeba ski resort in Niigata prefecture on the Japan Sea, about an hour and fifteen minutes from Tokyo by super express. Thanks to the Resort Law, 58 condo buildings comprising 15,000 units were constructed. By 2012 prices had dropped so far that local real estate agents were advertising condos “for the price of a car.”
The bulk of these residences were small–less than 30 square meters–which means they probably held little interest to anyone who didn’t ski. Still, the drop in value was dramatic. One 28-square-meter unit built in 1989 and which originally sold for ¥14 million was auctioned off for a mere ¥40,000. In fact, that particular apartment was bought by the tenants association of the building. The association was worried that, at that price, anybody could buy it, and thus there was the possibility that the person who did would not be able to keep up with the monthly management fees and annual property taxes. The association planned to try and sell it at a higher price.
The reason prices had dropped so far was that the people who owned the condos didn’t use them any more. Besides being cramped, the condos were of generally poor quality, and, for whatever reason, the owners just got tired of making the trip. Most of the vacancies had nothing to do with foreclosure. Instead, the local government or building management companies seized the properties because of non-payment of contract management fees and property taxes. Another 28-square-meter condo that originally sold in 1989 for ¥14 million was going for ¥310,000, but the buyer also had to assume ¥17,000-a-month payments for management and pay ¥38,500 a year in property taxes. For a 50-square-meter apartment that originally sold for ¥40 million and was now worth ¥400,000, the management fee was ¥27,000 a month and the property tax ¥97,000. In some cases, people who bought used resort condos were required to cover the management fees that the previous owners didn’t pay before they could move in, thus making them that much more unattractive.
According to the Yuzawa municipal government, 40 percent of owners of resort properties in their city, whether for condos or besso, hadn’t paid property taxes for more than two years, and 80 percent of these scofflaws had their prime residences in Tokyo. The problem had become so serious that Yuzawa set up a special section in its Tokyo representative office to track down these owners and make them cough up what they owed.
It was springtime when we went to Nikko, an historically significant town north of where we lived, to look at more besso. In our minds we thought of Nikko as the poor man’s Kamakura, which is where we would have preferred to live but couldn’t afford to. Another reason for its appeal was its distance from the ocean, meaning no tsunami danger, and while it gets its fair share of earthquakes Nikko seems to be on more solid ground.
We’d looked at properties in the general vicinity, but this time we looked in Nikko proper. In fact, the first place we inspected was a ten-minute walk from Nikko Station. The fact that it was only ¥5 million will give you an idea of the condition it was in, but from the photos on the realtor’s website it looked salvageable. Obviously, at that price we were buying the land. The house was built in the early 70s, though the second floor was a later addition.
We met the agent about a block from the property. He had taken the train up from Tokyo and rented a car, since he would be showing us another property a bit further out of town. The house was located next to a makeshift parking lot to the west. To the north there was plenty of space between the house and its neighbor and the garden was located to the east; beyond it was nothing. So on three sides there was a lot more room than you might expect from this part of town, which was residential in a pleasantly diverse way. The house “faced” south, and there was barely three meters between it and its neighbor. This is unfortunate because all the windows looked out on the wall of the house next door. Since the kitchen and bathroom are always located in the north portion of a Japanese house there were no windows on that side and for some reason there were no windows to the east either. The foyer was located on the west side. So that meant the only light would come from the south, and it didn’t look like much was going to make it into the house itself.
It was in even worse shape than we had suspected. The agent told us the owners had only left less than six months ago, but it was difficult to believe anyone could live in such a decrepit building: moldy tatami, peeling laminate floors and paneling, buckled cabinets in the kitchen. The second floor add-on consisted of two rooms that smelled as if someone had died in them. Any renovations would cost upwards of ten million, though the place really needed to be torn down. That would cost about a million, and then a new house would run another 15 probably. The location was good, but that was too much work.
We then drove up to the next property in a besso area in the mountains east of the city, located along a steep road. Snow was still abundant on the ground at that altitude, and the agent had trouble finding the entrance to the resort development. Houses were scattered along private roads that hadn’t been plowed. The hybrid he rented performed admirably albeit slowly as we climbed the hill past vacation houses closed up for the season. We felt bad about asking him to take us here. If we’d known it was so remote we wouldn’t have. He had to park in the middle of the street, which was no problem since there was no one else using it. Then we had to plod to the house, which was perched on a rise.
It was a typical vacation home: compact, simple. It wasn’t quite as bright as we had expected, and though the walls and floors were wood, the bedroom was tatami, and the winter dampness seemed to have made the mats mildewy. It also had a curious attic-loft with the most dangerous ladder contraption we’d ever seen. The agent said the owners were an older couple who lived in Tokyo and found it troublesome to come up here any more. It was trouble for us just to try to get into the loft, so I imagine they never even used it, unless they had grandchildren. In any case, it was impractical, even as a second house.
The agent drove us back to town and we had to kill time until our appointment with a different agent to see two more properties. We walked around the residential part of town, and then the tourist part and whatever image we had formed of Nikko from past visits dissolved as we got a closer look. Of course, most tourist towns in Japan are all surfaces, though we had thought Nikko was different. It wasn’t. Most of the older houses in town that weren’t on the main drag had not been kept up by their owners. The only halfway decent properties we saw were relatively new prefab houses that would probably look terrible in ten years’ time. The only thing you could say about central Nikko is that anywhere you were you had a breathtaking view of the surrounding mountains. Unfortunately, you also had a view of your neighbors.
The second agent was a local guy who worked out of a shack near the river. He also happened to be the head of the local organization that administers fishing licenses and we had to wait for a meeting of the officers to finish. Unlike the previous agent, he lived here year-round, and drove a big Range Rover that had no problem with the remaining snow. Again, we went up the hill to see the two remaining properties, both of which were fairly new and priced within our range.
The first one was an all-wood, one-story house in a development managed by the developer Tobu, which means you have to pay Tobu a monthly fee for upkeep. The house was well-laid out but even though it was only about ten years old the interior was already in disrepair. Winters, it turns out, are as harsh up here as anywhere, and the laminate floors needed care and the kitchen refurbishing. Again, though there were lots of windows the place felt dark and dismal. These owners were also older, lived in Tokyo, and now found the trip up a burden. It was some kind of pattern. Or a sign.
The second house was down the hill a ways and a bit larger. It was two floors, but the second was just for storage. Based on the floor plan we saw on the Internet, this was the property we were most interested in. Configured in an L-shape, the building wrapped around a small garden with a view down the hill. Unfortunately, the interior was in even worse shape than the previous house. We stayed hardly five minutes, and the agent, though courteous, knew right from the start we weren’t interested at all. When we returned to his shack we asked, out of habit, if he wanted us to fill out a questionnaire, which is the usual procedure after house inspections so that the agent can do follow-up. He looked at us and shrugged. Why bother? Why indeed.