J House prices

[InitialD]

We are thinking about buying a flat we like for 13mil yen, we plan to pay 35K month mortgage. At the moment we are paying 55K month to rent a place thats is too small for us. The one I want to but is 4LDK newer and I like the design, I want to make 1 room into a classroom for my students to come into without coming into our home, so keep the 2 seperate.

Anyway my question is why dont more people buy in Japan? Interest rates are so low now and it seems to me that you can pay a mortgage a lot cheaper than renting.

[Gaijin 06]

Building construction in Japan is generally a much lower quality than other developed nations.... as such, houses tend to depreciate rather than appreciate in value. Most houses will be flattened 40 years after they are built.

[KansaiBen]

Originally Posted by Gaijin 06

Building construction in Japan is generally a much lower quality than other developed nations.... as such, houses tend to depreciate rather than appreciate in value. Most houses will be flattened 40 years after they are built.

and if they are like some houses designed recently they will be demolished or deemed unliveable as they dont meet earthquake standards and have to be pulled down. Houses here are generally flimsy, not well insulated and have a shelf life of about 20-30 years, if that.

[InitialD]

Do you think its the same with flats?

This place we are thinking of buying is very good quality, very modern and clean.

What are all the things to consider? You havent got to pay land tax (or whatever its called in English) but you have to pay other charges for flats.

Anyway I still think that if I could get a mortgage (father in law will be garantour) we would be paying less every month, and aquiring an asset.

[KansaiBen]

Originally Posted by InitialD

Do you think its the same with flats?

This place we are thinking of buying is very good quality, very modern and clean.

What are all the things to consider? You havent got to pay land tax (or whatever its called in English) but you have to pay other charges for flats.

Anyway I still think that if I could get a mortgage (father in law will be garantour) we would be paying less every month, and aquiring an asset.

with flats (apartments) you dont actually own the land it sits on but have title to the individual apartment. There are no maintenance costs to worry about but what has often happened is you move into some place and a developer builds a place down the road, blocks out your sun, or sells apartments half what you paid for yours or at steep discounts, and there is squat you can do about it. Its only an asset if it keeps or rises in value. It's an albatross if it declines in value and your mortgage is worth more than your apartment's value.

You will have to pay a body corporate fee on your apartment which pays for maintenance, gardening, cleaning of common spaces, and the salary of any managers who live in the building.

[Gaijin 06]

Originally Posted by InitialD

Do you think its the same with flats?

It is a lot worse with flats, since you do not own the underlying land.

Originally Posted by InitialD

This place we are thinking of buying is very good quality, very modern and clean.

Appearances can be very deceptive. You might well be right, but there have been numerous building scandals here (architects skimping on steel to keep the building costs down!) and even modern buildings are not built to last.

Originally Posted by InitialD

What are all the things to consider? You havent got to pay land tax (or whatever its called in English) but you have to pay other charges for flats.

I thought you did have to pay extra taxes if you own a flat, I don't remember the name but they are levied annually.

Originally Posted by InitialD

Anyway I still think that if I could get a mortgage (father in law will be garantour) we would be paying less every month, and aquiring an asset.

You could be paying less, but it is doubtful you will be acquiring an asset. Condo's generally depreciate in value, not appreciate.

Also don't forget you are responsible for things like your boiler, all the interior plumbing, electrics and suchlike - which are expensive if they go wrong. You might also be liable for shared costs (new roof, concrete repairs, drainage work) for the property if the residents association determines work is needed.

I seriously looked into buying (looked at 30 odd properties, talked to the banks etc) earlier this year and concluded it is still better to rent, at least for me.

[InitialD]

Originally Posted by Gaijin 06

It is a lot worse with flats, since you do not own the underlying land.



Appearances can be very deceptive. You might well be right, but there have been numerous building scandals here (architects skimping on steel to keep the building costs down!) and even modern buildings are not built to last.



I thought you did have to pay extra taxes if you own a flat, I don't remember the name but they are levied annually.



You could be paying less, but it is doubtful you will be acquiring an asset. Condo's generally depreciate in value, not appreciate.

Also don't forget you are responsible for things like your boiler, all the interior plumbing, electrics and suchlike - which are expensive if they go wrong. You might also be liable for shared costs (new roof, concrete repairs, drainage work) for the property if the residents association determines work is needed.

I seriously looked into buying (looked at 30 odd properties, talked to the banks etc) earlier this year and concluded it is still better to rent, at least for me.

Thats interesting you still think its not worth it.

I think even if it does go down in value a bit its still better to be buying someting than renting.

OK when it comes to selling it you may get less than you paid, but still looking back over 10 years of renting or 10 years of paying a mortage its easy to see which one is best.


I am interested of the 30 you looked at, did you put in low offers that were not accepted?

[KansaiBen]

Originally Posted by InitialD

TOK when it comes to selling it you may get less than you paid, but still looking back over 10 years of renting or 10 years of paying a mortage its easy to see which one is best.


I am interested of the 30 you looked at, did you put in low offers that were not accepted?

what you lose when you sell may be more than what you pay in rent every month. Its still money down the drain that you wont be getting back. Maybe you are better off investing in stocks or renting it out and getting rental income off it to pay your mortgage. Its only an asset when it puts money in your pocket, not when it is taken out. People think cars are an asset, but not when they lose 50% of their value as soon as you drive it off the lot.


Owning your own place means you can also do alterations, add on a deck, things you cant do in a rental.

In Japan its not the house thats worth any money but the land that it sits on. Houses after 30 years are virtually worthless and ready to be knocked down anyway.

[Gaijin 06]

Originally Posted by InitialD

Thats interesting you still think its not worth it.

I think even if it does go down in value a bit its still better to be buying someting than renting.

It depends on how much cheaper it is I guess. For me, renting was not significantly higher the the costs to service the mortgage.

Originally Posted by InitialD

OK when it comes to selling it you may get less than you paid, but still looking back over 10 years of renting or 10 years of paying a mortage its easy to see which one is best.

Defintely.. however this does mean you have to stay in the same propert for 10 years. This loss of flexibility made it less attractive for me.. especially with the high one-off costs. Expect to pay around 7% of the purchase price in one off fees and taxes.

Originally Posted by InitialD

I am interested of the 30 you looked at, did you put in low offers that were not accepted?

No, I didn't make any offers in the end. One reason for this is I began to appreciate the huge amount of new, unsold condo inventory in Tokyo which the developers are going to have to heavily discount to sell.. this will create negative downwards pricing pressure and I expect significant bargains to pop up when it does.. I will check again next summer.

[countryboy]

Originally Posted by KansaiBen

Maybe you are better off investing in stocks or renting it out.

In Japan its not the house thats worth any money but the land that it sits on. Houses after 30 years are virtually worthless and ready to be knocked down anyway.

It still ceases to amaze me paul how you continue to spout this same ole same ole, that you learned 20 years ago from some of your students, but decline to look beyond any of those assumtions and evidence that shows something contrary to those assumptions that are far from true today.

[KansaiBen]

Originally Posted by countryboy

It still ceases to amaze me paul how you continue to spout this same ole same ole, that you learned 20 years ago from some of your students, but decline to look beyond any of those assumtions and evidence that shows something contrary to those assumptions that are far from true today.

Ultimately it all comes down to how comfortably you are with risk. There are pros and cons to renting vs buying a house obviously but the OP seems to be at a point where hes sick of throwing good money away on rent when he could be buying his own place. The downside is that depending on where he buys it could devalue quickly. Thats money hes throwing away and cant recover. Its an opportunity cost that he cant use money productively somewhere else. Currently I own a place in NZ nad have to pay $2500 a year to the body corporate people for maintaining the infrastructure, fixing repairs and leaks etc. I imagine in a Mansion type place you are looking at a couple of hundred thousand a year in admin fees as well as your mortgage.


You have to decide how much of a 'loss' you are willing to absorb if prices drop, beyond which put you will regret putting money into a house in Japan, becuase it simply becomes a sink hole that sucks up all your money even though its 'your' house. I lived next to a guy who bought a mansion and after 10 years the place was worth 1/3 what he paid for it and he was still stuck paying off the mortgage on a place that was worth less than half what he owed.

It all depends on location of course, at any rate and often people fall in love with places because its clean and tidy (most new places are, anyway) than worry about such things as neigboring housing values etc.

[Gaijin 06]

Originally Posted by countryboy

It still ceases to amaze me paul how you continue to spout this same ole same ole, that you learned 20 years ago from some of your students, but decline to look beyond any of those assumtions and evidence that shows something contrary to those assumptions that are far from true today.

Erm, his observations are pretty spot on.

[Wage Slave]

Originally Posted by KansaiBen

In Japan its not the house thats worth any money but the land that it sits on. Houses after 30 years are virtually worthless and ready to be knocked down anyway.

Almost accurate I would say. A five year old house definitely still has significant value. After 30 years I agree it is virtually worthless unless it is exceptionally well built and in exceptional condition.

The analogy with cars is quite a good one except the depreciation curve is far less steep. Just like cars it depends what model it is too. Some brands hold their value far better than others - Sekisui House for example.

[KansaiBen]

Originally Posted by Wage Slave

Almost accurate I would say. A five year old house definitely still has significant value. After 30 years I agree it is virtually worthless unless it is exceptionally well built and in exceptional condition.

The analogy with cars is quite a good one except the depreciation curve is far less steep. Just like cars it depends what model it is too. Some brands hold their value far better than others - Sekisui House for example.

I bought a Toyota Harrier (called a Lexus in the US) for over 3 million yen, brand new and the salesman said it would hold its value. Wife ended up trading it in 7 years later for 1.5 million yen. Just shows you cant trust the word of car salesmen especially when it means moving cars off the lot. Property developers are in the same business (selling) except the price tag you pay for is a bit bigger.

[iLyo]

id say 1.5M for the 3M harrier after 7 years is pretty good.

[Majestic]

1. If you are considering buying a unit, the general rule is to buy one built after 1982, as that is when the construction standards law was significantly improved. I'm looking at a real estate investment guide that says of the buildings destroyed in the Kobe earthquake, the vast majority were built prior to the introduction of the 1982 standards. The real estate agent will have the building details, and you will have to provide these to the bank to obtain a loan. (The bank wants to know all about the building, because they don't want to underwrite a building that they can't resell if you default on your loan). Also, the building details will state how long the building itself is expected to last (figure 60 years for a new building).

2. There are two types of land purchase agreements: outright ownership and and leasehold. Leasehold is when you are merely buying the building, but the land itself belongs to someone else, and so you have to pay a rental fee for the land. Since leasehold agreements have an element of risk and unpredictability in them, the properties on this kind of land will sell for a pretty big discount. These are generally harder to resell as well. I don't know how much land is still under leasehold, but it seems to be a relatively small share (my impression only). If the land is not under leasehold, it means you can buy it outright. In terms of an apartment, it means you are buying a portion of the land the building is on, as well as the individual unit itself. You will be liable for the yearly fixed asset tax. Fixed asset tax is 1.4% of the assessed value of the land and building. If there are 50 units in the apartment building, and all are equal size, you will be deemed to be an owner of 1/50th of the land. Note the assessed value is usually significantly lower than the actual purchase value. You will also be liable for city planning tax, which is 0.3% of the assessed value of the land + property.

3. You will be able to take a tax deduction for interest on your home loan.

4. Do not expect the property to increase in value.

5. You will have a monthly management fee, and a monthly sinking fund fee. The management fee covers ongoing daily maintenance. The sinking fund is a pool of money that is used to effect major repairs. A low monthly sinking fund fee is probably a sign that the building owners do not have enough money to make major repairs should the need arise. Again, the real estate agent should show you the property's financial books, so you can see for yourself what the budget is.

6. At the time of purchase you will have to pay agent's fees (unless you are buying it off the plan). Agent's fees are 3% of the purchase price. There are other fees too such as stamp tax and conveyancing, etc...

[InitialD]

Thanks Majestic, thats what I call a helpful post.

I have found some incredibly cheap flats built in the late 80s still in avery good condition.

I cant see how its not worth it to buy over renting. The repayments are definately less than renting a similar place (so always in the back of my mind we could rent it out if we do move) its just those other charges I wanted accurate info about.

So thanks again for very helpful information.

[RDB]

The reason most people just rent for years on end is because it seems too much hassel to get a mortgage approved.

But once you have it all sorted out its cheaper per month to pay a mortgage than to rent. But dont go thinking your place is going to be worth more than you paid in the future.

Out of interest what are the details of this place you are interested in? You say is 13mil yen and 35K mnth repayments? Whats interest rate and are there any catches?

Anyway 13mil sounds cheap for a brand new 4ldk, whats the area like? Where is it?

[Gaijin 06]

Originally Posted by RDB

Out of interest what are the details of this place you are interested in? You say is 13mil yen and 35K mnth repayments? Whats interest rate and are there any catches?

13 million over 25 years at 2% would be 55k a month.

Even at 0% interest, borrowing 13 million and repaying it is (13m/(25*12)) = 43k a month.

To make the OPs figure of 33k a month on a 13 million loan, he could be looking at 1.9% interest and a 50 year repayment period?

[Since1990]

Originally Posted by Gaijin 06

13 million over 25 years at 2% would be 55k a month.

Even at 0% interest, borrowing 13 million and repaying it is (13m/(25*12)) = 43k a month.

To make the OPs figure of 33k a month on a 13 million loan, he could be looking at 1.9% interest and a 50 year repayment period?

Maybe the OP has some atama kin?

[Gaijin 06]

Atama kin?

[iLyo]

head money is usually paid to the current owner as a deposit of sorts to hold the place at the value stipulated until the bank decides to finance or not. If not, you get all the money back. If it does, and you back out.. then the owner keeps the money. this is then deducted from the total value given over. Banks usually look into how much atama kin you have already paid so again, it would not add to the final amount. unusual for them to repay you the atama kin.

So in that sense, it is a bit odd that atama kin would increase how much the person i paying.

[InitialD]

Yes the figures I was working on included a deposit. Then we pay 35K mnth for 10 yrs to pay off the rest.

Here is the place in question.

http://www.daikyo-realdo.co.jp/cgi-b...CH_TYPE=CHIIKI

Actually there are more charges that I dont like. I dont know what its called in Japanese but they want about another 4K month on top of 6K mnth maintenance fee for repairs. I said what the hell is the 6K for if not repairs?

Anyway its not worth it for another 10K mnth on top of the mortgage repayments.

[Gaijin 06]

Originally Posted by InitialD

Yes the figures I was working on included a deposit. Then we pay 35K mnth for 10 yrs to pay off the rest.

You're only borrowing less than 4 million yen?

I didnt realise banks would make mortgage contracts for this amount.

[Gaijin 06]

Originally Posted by InitialD

Actually there are more charges that I dont like. I dont know what its called in Japanese but they want about another 4K month on top of 6K mnth maintenance fee for repairs. I said what the hell is the 6K for if not repairs?

One will be a sinking fund fee, and the other a general services fee.

The general services would cover electricity in the communal areas, janitorial services, building insurance, management fees etc etc... shared stuff that recurs yearly.

The sinking fund will go into a pot and be used for any major work that needs doing - repainting the outside, repairing the roof etc etc.

[PanicInducingGaijin]

First, KansaiBen is speaking the truth about renting vs. buying. He's off-base on the car trade-in, though. Getting half price back after using a vehicle for seven years is very good indeed.

Secondly, if you can get a 4LDK that you like for 13 million yen and manage to live there for those 10 years, then I think you'll have come out a winner regardless of what you get when you sell.

[kotoha]

With houses, yes they depreciate but in MOST cases (talking average Japanese middle-class family's house here, not an 8LDK custom import job), the house is pretty worthless to start with, at least in an urban area. Empty lots, or even lots with old houses on them that theyexpect you to tear down at your own cost.... dont go for THAT much less than lots with houses on them. If you buy a house, at least you can sell the land.

With a condo, yeah its MUCH less of an investment because you dont have the land.... the buildign itself will only depreciate in value but it has SOME value... if you sell it you can get SOMETHING back whereas if you rent you're never going to see anything but MAYBE the deposit.

If you are planning to live here for long enough to pay off the mortgage though, why not? Its LESS rent than you're currently paying, and if you stay in that place after it's paid off, yes you'd have repairs and things but NO RENT! yay! The maintenance fee is something to consider but it doesnt sound very high... and I know it depends on the person but I LIKE repairs being on me... that way, at least if something breaks I can use it as an excuse to replace it with something better!

And you can always just do remodeling because you WANT to, when you can afford it... put as many holes in the wall as you want, keep pets (although with a condo they do still have rules about that, in general if you own you have more freedom than a renter) etc.

In this situation, even if the property DOES depreciate, you'd be paying less per month from the start and would have SOMETHING to sell, even if it wouldnt sell for much, at the end of it. Sounds like win-win to me.

[sparkylinked]

In October we decided to build a house. So we bought a log house.
They will start building it in March. We got a 10 year fixed loan at 2.1% If you go 3 years you can get it as low as 1.5 but who knows what the future will bring.

[ひさしぶり]

Originally Posted by sparkylinked

In October we decided to build a house. So we bought a log house.
They will start building it in March. We got a 10 year fixed loan at 2.1% If you go 3 years you can get it as low as 1.5 but who knows what the future will bring.

Sorry, but the people who have posted above are serious and are not talking about what you're trying to live in. Good luck though...

[InitialD]

I just heard about the Japanese base rate being cut to 0.1%.

Whats the truth to how this will affect mortgages?

We have already got a mortgage approved for 2% for the first 10yrs. Now I will try and get a lower interest rate.


I am in negotiations to get get this 4ldk apartment we like. Apparently there was some problem with the architecture and that's why its cheaper than normal, it will affect the resale price but we don't mind. Its very nice looking only 2yrs old.

I have put an offer in for 9mil and the agent said no they already reduced it to 12.8mil yen.

Whats the best way to proceed I really want to get this for about 10mil?

[RDB]

Originally Posted by sparkylinked

In October we decided to build a house. So we bought a log house.
They will start building it in March. We got a 10 year fixed loan at 2.1% If you go 3 years you can get it as low as 1.5 but who knows what the future will bring.

How right you were who knows what the future will bring? The base rate has been cut to almost nothing who saw that one coming?

The truth is though that this will take time to be passed on to the average house buyer. I cant see the banks lending money for 0.anything %. If you can get something like 1% mortgage you are doing well.


About J House prices I still think now is not the time to buy, we havent hit bottom yet and this drastic rate cut shows the governmant is scared.

I'll cut most of the doomladen predictions I might give but don't some optimistic people here living in a fool's paradise know that bubbles when burst (and this one has been well and truly burst) collapse rather dramatically and we are witnessing the mother of all bubbles being pricked.

[sing_or_die_1818]

Originally Posted by kotoha

If you are planning to live here for long enough to pay off the mortgage though, why not? Its LESS rent than you're currently paying, and if you stay in that place after it's paid off, yes you'd have repairs and things but NO RENT! yay! The maintenance fee is something to consider but it doesnt sound very high... and I know it depends on the person but I LIKE repairs being on me... that way, at least if something breaks I can use it as an excuse to replace it with something better!

And you can always just do remodeling because you WANT to, when you can afford it... put as many holes in the wall as you want, keep pets (although with a condo they do still have rules about that, in general if you own you have more freedom than a renter) etc.

yes, i think kotoha's hit the nail on the head in one regard: one's answer to the "buy or rent" question surely hangs on one's future expectations re "living or leaving". just bought land and built a house this past year out in the boonies. although it would have been outrageously cheap to stay in university faculty housing until retirement at, say, \12,000/month for a 3LDK, there's a lot of factors--and not all of them economic--that might lead one to favor buying a place of one's own and joining a proper neighborhood (more so, i think, if one adds kids to the equation--as we have as of last month...). paying back a home loan of \100,000 or so a month until retirement (but then being free and clear) looks daunting at times, but i'm feeling good about the decision in our particular case...

[RDB]

Originally Posted by sing_or_die_1818

yes, i think kotoha's hit the nail on the head in one regard: one's answer to the "buy or rent" question surely hangs on one's future expectations re "living or leaving". just bought land and built a house this past year out in the boonies. although it would have been outrageously cheap to stay in university faculty housing until retirement at, say, \12,000/month for a 3LDK, there's a lot of factors--and not all of them economic--that might lead one to favor buying a place of one's own and joining a proper neighborhood (more so, i think, if one adds kids to the equation--as we have as of last month...). paying back a home loan of \100,000 or so a month until retirement (but then being free and clear) looks daunting at times, but i'm feeling good about the decision in our particular case...

Its not just about staying or leaving. You can usually rent out a nice apartment for more than the mortgage payments. Most people are frightened by the setting up work.

So if you do buy you are not comitted to having to live in Japan forever no matter what. You can either sell or preferably rent. Especaily now that the bank of Japan has made borrowing almost free.

From the BBC-

"The Bank of Japan cut its benchmark interest rate to 0.1%, on Friday in a bid to kick-start the economy. "

[InitialD]

This same flat has been reduced now to 11mil yen.

I had almost gone off it because we have been thinking about buying a house instead.

But I wonder how low they will go now.

I may put an offer in again for say 7mil yen and see how they negotiate.

Do you think the financial crisis will really help house prices drop here?

[Hijinx]

Originally Posted by InitialD

This same flat has been reduced now to 11mil yen.

I had almost gone off it because we have been thinking about buying a house instead.

But I wonder how low they will go now.

I may put an offer in again for say 7mil yen and see how they negotiate.

Do you think the financial crisis will really help house prices drop here?

That's what one of my wife's relatives, who is a real estate agent, seems to think. She said later this year, housing prices are going to drop even more. And she was saying that manshons are just not selling anymore, so you can really pick them up for a steal. I would wait six months and see just how hard this economic crisis is going to hit.

[Gaijin 06]

Originally Posted by Hijinx

That's what one of my wife's relatives, who is a real estate agent, seems to think. She said later this year, housing prices are going to drop even more. And she was saying that manshons are just not selling anymore, so you can really pick them up for a steal. I would wait six months and see just how hard this economic crisis is going to hit.

Yep, it has been that way for well over a year. I posted this a while ago

No, I didn't make any offers in the end. One reason for this is I began to appreciate the huge amount of new, unsold condo inventory in Tokyo which the developers are going to have to heavily discount to sell.. this will create negative downwards pricing pressure and I expect significant bargains to pop up when it does.. I will check again next summer.

The topic has been well covered in the press. Here is a Nikkei article with some figures

http://www.nni.nikkei.co.jp/AC/TNKS/...20D20JFN04.htm

Number Of Condos Offered In Greater Tokyo Dropped 28% In '08

TOKYO (Nikkei)--In the greater Tokyo region, 43,733 condominiums went on the market last year, down 28.3% from 2007, according to data released Tuesday by the Real Estate Economic Institute Co.

The last time the total was this low was in 1992, right after the economic bubble collapsed. New condos offered in the greater Osaka region also fell 24.7% to 22,744, a 15-year low.

The average price for a condo in greater Tokyo rose 2.8% to 47.75 million yen, up for the sixth straight year, reflecting high costs for land and construction materials a few years ago.

Several developers went belly up last year, including Urban Corp., causing potential buyers to grow cautious. And it has become more difficult to get mortgages from financial institutions.

Purchase contracts were signed for 62.7% of the new condos in the Tokyo metropolitan region, down 7 percentage points. Inventories climbed 15.5% on the year to 12,427 units as of Dec. 31.

The condo market is expected to improve slightly but remain sluggish this year. New offerings are projected to rise 7.5% to about 47,000 in greater Tokyo on increased construction starts and lower sales prices.

"The key for 2009 is whether the developers can reduce inventories during the January-March quarter and bring the ratio of sales to units available back up to 70%," according to the Real Estate Economic Institute.

To deal with this slump, Yuraku Real Estate Co. (8838), which until now had a subsidiary handle all condo sales, has begun taking on some sales itself so that it can offer discounts and free furniture to customers. And Mitsubishi Estate Co. (8802) has set up a concierge desk that gives potential buyers access to information on a variety of properties at a single location.

[jinseinosensei]

Am I the only one here who thinks it's better to buy ten properties, in the same area, at auction, than to spend that same amount on a single place...? In these economic climes and during these unstable times, I'd never buy a house on the regular market while one can get the exact same thing for a quarter or eighth of the cost. Repossessed properties are so plentiful that bidding has dropped to record low amounts and the number of bidders per property is unbelievably low too. Am I missing something here...?

[wasDOUGLAS]

Originally Posted by jinseinosensei

Am I the only one here who thinks it's better to buy ten properties, in the same area, at auction, than to spend that same amount on a single place...? In these economic climes and during these unstable times, I'd never buy a house on the regular market while one can get the exact same thing for a quarter or eighth of the cost. Repossessed properties are so plentiful that bidding has dropped to record low amounts and the number of bidders per property is unbelievably low too. Am I missing something here...?

No, you're probably right on that one--but if you are looking to buy a place to live in, it's a tougher choice. The repossessed properties suitable for live-in/ownership are usually pretty bleak. Most houses are built with shoddy materials and the contractors love to cheat.

We opted for middle ground on this one. Not exactly repossessed but not from the original owner. We live 20 minutes from the main station (by car...30 minutes or so by bus) in a city of roughly 700,000. We looked at house after house--new and old, domestic and imported, garbage and grandiose, for nearly two years. Finally we found a house that was custom built and was only 5 1/2 years old. It had been new for nearly 60 million. However, the guy fled in the middle of the night from his creditors, and a Tokyo Realtor took it over. After going over the place with a fine-toothed comb and having a carpenter in to privately assess the place, we offered nearly 5 million less than the asking price and they took it immediately. We should have gone even lower.

The house was bought for just less than HALF the originally price, and was less than 6 years old. It was immaculate, beautiful and had far more features than we could have EVER afforded if we had built new. Even my foreign friends have been shocked at the level of craftsmanship and materials. They didn't cut corners on anything except a pretty shoddy wooden deck (which is the norm here). It's either a cheapo cedar deck that has to be constantly maintained/replaced or a very very expensive imported hardwood deck that costs a fortune.

That shows a couple of things---house prices are really dropping, and there are big bargains to be had. However, even with all the depreciation after a measly 5-6 years, it looks like the house may be worth even less than we had bought it for. Even with a new hospital, supermarket, schools and a big bus depot within easy walking distance. Only houses within a short walking distance of a train/subway station may be the exception--depending on the area.

Looking back, the stress that all this brought, even with a pretty decent mortgage: income ratio (very good by Western standards), I don't think it was nearly worth it. I doubt we could sell it for 5 million less than we bought it, even IF there is a big economic turnaround.....and that is now a very big IF.

Rent....don't buy. Even if your kids like the space. Don't let greed get the better of you.

[Gaijin 06]

Originally Posted by wasDOUGLAS

Looking back, the stress that all this brought, even with a pretty decent mortgage: income ratio (very good by Western standards), I don't think it was nearly worth it. I doubt we could sell it for 5 million less than we bought it, even IF there is a big economic turnaround.....and that is now a very big IF.

Rent....don't buy. Even if your kids like the space. Don't let greed get the better of you.

Very interesting to read your comments and the history - thank you very much for posting that.

[wasDOUGLAS]

Originally Posted by Gaijin 06

Very interesting to read your comments and the history - thank you very much for posting that.

Thanks. It was a lesson learned for us, albeit a very very hard one. Even very high quality, a great price, a decent location in a relatively rich city, and a relative deal from the bank--10 year mortgage locked at 2%, has still meant that we are either going to have to ride out the economic storm here tied to a house that--although is beautiful and is well within our budget--will likely never be anything but an albatross tied round our necks.

I'd give anything for our old stress free apartment, lack of space and all.

The only redemption COULD come with our decision to turn the house into a business-it was built originally with that in mind. If it was a regular house without a parking lot for six cars and a huge living room with built-in seating for 10-12 people (don't ask, just imagine), I'd be even more down about it. We may be able to turn things around by the fact that this house was designed as a showroom for the former owner's interior decoration business. It would make an excellent English school. Knock on wood.