Back to the land

CIMG1953During the New Years break our house-hunting ambitions flagged a bit, and we started reassessing our priorities: What would happen if we went back to zero? In other words, we thought carefully about building our own house. The last time we did that, almost 20 years ago, we got burned, more because of our own ignorance than due to any concerted effort on the part of the real estate and construction industries. But we know more now and feel that we should at least explore the idea. For instance, we like the small houses built by A1 and they’re pretty cheap, so we could talk to them about our needs and what they can do to satisfy them. But first we would need to find a piece of land.

Though land prices have fallen since the bubble period, it’s still pretty expensive anywhere within, say, two hours of Tokyo. We’re not commuters so we don’t need to be on a main train line, but we do need to be on some train line. We started our search at the bottom, in two areas not that far from where we live and which we’ve come to know through our house-hunting inspections in the past year-and-a-half: northern Chiba along the Narita line, and south of where we live now, along the Keisei Hon-sen through Sakura. As it turned out there were more than a few very cheap properties that were still large enough for our purposes. By cheap, we’re talking ¥5 million or less, and for that price you definitely have to give up something. In some cases, the plot isn’t properly developed, meaning it may not have sewage or gas lines extended into the property itself. Also, cheap plots tend to be holdouts in sub-divisions that are already mostly filled, meaning no one wants them but the developer is desperate. The lot might be stuck in a dark corner of the neighborhood or have problems with access, which isn’t a concern for us because we don’t have a car, but sunlight is one of our priorities. Then there’s the state of the lot itself. Some appear to require a great deal of “preparation” before they could have a house constructed on them, and we have no idea how much that would cost. Read More

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This land is UR land

Tract of UR-owned land near Inzai Makinohara station on the Hokuso Line

The Asahi Shimbun recently reported that the government finished auditing its accounts for fiscal 2011. The board that conducted the investigation found 513 separate cases of “waste” comprising ¥529.16 billion, the largest amount since records have been compiled. In the wake of media reports that have government organs inappropriately using tax money earmarked for reconstruction of the disaster-hit Tohoku region, it is natural to assume that this waste would be doubly scrutinized, but we won’t hold our breath. One of the areas that will probably invite less concern is assets held by dokuritsu gyosei hojin–independent administrative agencies–that remain unused. In 2010, the cabinet issued a directive that such assets should be returned to the government, but apparently that’s not happening as the auditors found lots of unused assets lying around–literally, in many cases, since the assets that seem to be the most problematic are real estate-related. The National Hospital Organization, for instance, owns 217,000 square meters of land valued at ¥6.7 billion that remains undeveloped and with no plans for development. According to the cabinet directive this land should be handed over to the national government.

Another independent administrative agency with lots of unused assets is Toshi Saisei Kiko, more popularly known as UR (Urban Renaissance), the semi-public housing corporation that the government would like to make completely private because it’s such a sinkhole for money. Since UR’s business is the sale, development, and management of real estate, its unused asset problem is also a business problem, and the auditors found that the company controlled 223 hectares of land valued at ¥89.7 billion that was unused, which many not sound like much, but apparently the audit board was only talking about assets that were supposed to be “processed” during FY2011. As almost everyone knows, UR has lots and lots of land that remains undeveloped, and since all of UR’s debts are covered by the government the auditors insist that UR can cover at least some of its deficits by liquidating land assets. Read More

Home Truths, June

Here is this month’s Home Truths column in the Japan Times. Almost everything we discuss in the article we’ve already discussed in more detail somewhere on this blog, but this is a fairly concise overview of the whole cramped housing development issue. Since this is a situation that almost anyone who buys a house must contend with, we’d be grateful to hear comments from readers, especially those who have direct experience with the problem–if, in fact, it is a problem. We’ve sort of come to the conclusion it’s something you have to live with.

Home Truths, April ’12

Minami Senju

Here’s this month’s Home Truths column, which is about cramped urban neighborhoods that could turn into death traps in the event of a major earthquake. Though much is made in the column about the Tokyo Metropolitan Government’s measures to address this problem, we don’t really think it will make much of a difference. Anyone who has read Edward Seidensticker’s fascinating, peculiar, and often frustrating history of the city will understand one thing, that Tokyo defies any notion of city planning with an almost rabid resolution. The “low city” that is Seidensticker’s main subject is portrayed as an organic entity, one that resists any foreign (i.e., governmental) claim to its control as if it were a virus. Most of these neighborhoods sprang up almost overnight after disasters devastated other portions of shitamachi. Working class people moved on to farmland in the outer portions of the city because the place they used to live was destroyed by an earthquake, a fire, or American bombs. Economies of necessity superseded any authoritative prerogatives and communities were born. Those communities are still there. Romantic types love these neighborhoods because they represent what it is they appreciate most about Tokyo, its makeshift conviviality and resistance to conventional ideas of city order. And because those neighborhoods did develop organically, they really do characterize the urban experience in its purest form. But part of the appeal has to do with that hoariest of Japanese cliches, the beauty of transience. These neighborhoods were created by disaster and they will disappear by disaster again. The authorities’ means of addressing this situation may seem flat-footed and ill-advised, but the reasoning is unassailable. In their present state, these neighborhoods will go under, and they will take their inhabitants with them. Maybe there’s nothing anyone can do about that, but it doesn’t mean we shouldn’t at least think about it.

That sinking feeling

Tilt: Park City Townhouses in May

It was recently reported that 32 households in the city of Urayasu, Chiba Prefecture, plan to sue Mitsui Fudosan, the company that developed their neighborhood. Urayasu, of course, suffered particularly bad liquefaction during last March’s big earthquake, since most of it is built on landfill. Some of the residents of Park City Townhouse, where homes originally went on sale in 1981, have accused Mitsui of neglect, since their homes were extensively damaged while surrounding neighborhoods, which were built by other developers, experienced much less damage. The plaintiffs are asking for ¥700 million.

Many people in Urayasu have already carried out repairs on their homes, including jacking up building that sunk during the quake. The local government gave up to ¥2 million to each household that suffered damage, but for some homes that isn’t nearly enough. Jacking up a house costs at least ¥10 million. The problem with a place like Park City Townhouse is that all 70 households are supposed to act as one when making a decision, and for months the community was split between repairing and rebuilding. In order to use the large-scale repair fund (shuzenhi), which all the homeowners contribute to on a monthly basis, three-fourths of the residents have to approve. And in order to rebuild the whole neighborhood–which would require a considerable investment from everyone–four-fifths of the residents have to say yes. So far, neither of those proposals have been addressed, but almost half have decided they will file a suit “in solidarity” against Mitsui. Those residents who are not taking part in the suit, according to the weekly magazine Aera, seem to doubt that they could possibly win against such a big company. In addition, some are averse to the publicity, which will do even greater damage to their property values than the quake itself has already done.

Park City Townhouse has always been something a model community. The homes, which originally cost about ¥30 million, retained their value better than most Japanese homes do, up until the quake, that is. Made up completely of two-story townhouses–a style that was popular until land values skyrocketed, thus making multi-story condos more feasible from a financial standpoint–Park City has been used as a backdrop for many movies and TV dramas when producers want to show modern lifestyles. However, the quake revealed what a shoddy job the developer did in preparing the land. Across the street, the predecessor of the semi-public housing corporation UR developed a three-story apartment complex on land that was prepared with a process called sand compaction. (Tokyo Disneyland, which isn’t far away, used the same process, which is why only the parking lot, which didn’t use it, was damaged in the quake) It suffered very little damage in the quake. In Park City, all 70 units were designated hankai (destroyed) to some extent by housing authorities. In addition, large cracks appeared in the ground from which deposits of old garbage such as discarded carpeting–i.e., landfill–come up to the surface. Geologists say that there is no real difference between Park City and the UR complex in terms of potential for ground liquefaction, so the plaintiffs are charging Mitsui with neglect when they prepared the land, and according to Aera’s research other Mitsui developments in other cities suffered liquefaction as well.

Mitsui has said it feels no obligation to pay for repairs or reconstruction, citing the now familiar reason that the earthquake was “beyond what anyone could have expected” (soteigai). Aera points out that the company is very powerful in Urayasu, having helped turn it into one of Tokyo’s most thriving suburbs, and therefore the local government is anxious about taking sides. There are similar suits pending in other neighborhoods throughout the affected areas targeting different developers, but Park City seems to be the one capturing the most attention.

Home Truths: property taxes

Our Home Truths column this month, which appears in the Japan Times today, is about property taxes, a fact of economic life that is taken for granted. As we imply in the article, most first-time home buyers don’t really take taxes into consideration when they embark on the biggest purchase of their lives, presumably because, like death and…well, taxes, it’s something you can’t avoid so there’s no reason to worry about it. And maybe it isn’t, depending on where you buy property. Outside of large cities and productive suburbs, property taxes can be minimal. What we found troubling, and the reason we decided to write about it, was the frequent looks of bewilderment we received from real estate agents when asked how much a particular property would run a buyer in terms of annual taxes. Some knew approximately, but some said they didn’t know at all and would check at the office (and then never called back because they sensed–rightly, in most cases–that we weren’t that interested in buying in the first place). This was odd in more ways than one. In the most significant way, property tax should be something a realtor knows by heart, since it has a direct bearing on the financial ability of the buyer to maintain whatever loan repayment schedule he or she will be responsible for. In a less signficant but more bizarre way, many real estate companies actually print the annual property tax levy in the ads for properties, so for their agents to profess ignorance is just downright laziness, and also indicates that none of them are ever asked such questions by potential buyers. In other words, the inevitability of property taxes has rendered them a moot concern; maybe people just prefer not knowing. Read More

A riddle

The house pictured above is on a major road in the city of Inzai, Chiba Prefecture. It was built in 2004 on a 446.28-square-meter plot of land. The floor area of the house itself is 82.29 square meters. It is less than one minute from a bus station. The bus ride from that station to Inzai Makinohara station on the Hokuso train line is 13 minutes (from Inzai Makinohara to Nihombashi is a little less than an hour). Since the land is relatively large, there are none of the usual privacy problems one gets in Japanese housing developments, and the lack of buildings in the surrounding area means the house gets a lot of sunshine from three different directions.

According to Inzai city records, the average price of a single-family home in this particular area of the city is ¥24 million. This house is now on sale for ¥15 million. It has been on sale for more than three months, which is why we went to see what it looked like. With the conditions we mentioned above, this should be a steal, but for some reason no one seems to want it. Of course, normally in Japan, a house that’s older than 20 years, unless it’s in the middle of a major city, has no value. This one isn’t that old, and though it’s hardly impressive in terms of design or style, it still seems to be in good shape. Moreover, the land, which is on a major thoroughfare, should be worth quite a bit (if Inzai’s assessment protocols can be considered accurate).

But even if the property’s continued vacancy seems a mystery, it’s not a place that we ourselves would ever want to own, and maybe that feeling, more than the logic of the economics, says something.