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Old Nov 5, 17, 11:28 pm #1
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Has anyone built or purchased a house in Japan?

Japan Forum,

I'm considering buying a house in Japan. Any experience with specific builders? Currently looking at PanaHome, Misawa, and Tama.

Biggest priority is earthquake safety, which Sekisui House and PanaHome appear to be best at. But I could be wrong about that.

Second priority is long-term reliability (i.e. mold resistance, termite resistance, etc.; I know a large part of this is up to the care of the owner) and third would be comfort (insulation, technological amenities, etc.).
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Old Nov 6, 17, 1:27 am #2

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I'm hardly the best candidate to answer this, as I don't live in Jpn and have never gone through the process. But I have been reading about home buying/building/renting in Jpn (as part of the bigger pondering about moving to Jpn), and I have immediate family members who've bought home and have done house reform.

These are my observations:
- It doesn't seem like there's any concensus opinion about a particular big-name home maker. Find 5 posts on Sekisui or Sumitomo and you see 5 different opinions about them. Lot depends on the quality of the sub-contractors that happen to get involved.
- When I read about various issues people run into with home makers and subcontractors in Jpn such as corner-cutting and accountability problems, I get the impression that Jpn is really no better than US overall.
- There is significant markup by big-name places just because they can get away with it due to marketing.
- Some people go with small local places, which are usually cheaper. But that option is not without risks.
- This is probably a common knowledge but, because much higher % of Japanese people demand brand-new homes than in US and other countries, homes depreciate fast in Jpn. It seems to me that that makes for a poor investment.
- If you're worried about earthquake safety, you really need to look at more than just the home design. Quake-proof build is important, but you also have to research the jiban (constitution of the earth on which the neighborhood sits) and make sure it's far enough away from known fault. There are government websites with those resources.

I'm not sure if you read Japanese, but you can maybe have a look at this website. I can't vouch for the accuracy of the info, though.
https://towntv.co.jp/housemaker.html
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Old Nov 6, 17, 6:26 pm #3
mjm
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evergrn makes a very good point. The jiban is very important. If you have a choice of where to buy the plot of land then I would look into that. If you have a plot and are interested in building on it, you can build a safer house by using anti-earthquake construction methods such as custom foundations etc. You definitely want a steel frame. Another good point was the one about the value increasing or not. This is more or less a given. The ground will go up in value, the house not. If this is an investment, it is one of your lower return choices.

Builders here are going to be a mixed bag, but getting a consultant on board to oversee them will alleviate almost any possibility for error or delay.

Buying is easy if you want to go that route too.

Last edited by mjm; Nov 7, 17 at 6:15 pm
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Old Nov 6, 17, 7:05 pm #4

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The "where" part in Japan is important.

I'm a big fan of Muji pre-fabs and Misawa.



Quote:
Originally Posted by evergrn View Post
- This is probably a common knowledge but, because much higher % of Japanese people demand brand-new homes than in US and other countries, homes depreciate fast in Jpn. It seems to me that that makes for a poor investment.
IMO, no one in any country should ever consider their personal home an investment. It's a place to live. Capital appreciation is a nice byproduct, if it occurs. Counting on it or expecting it is a recipe for disaster. Investment properties are investments. Personal property is for living in.

Second point, the reason that homes in Japan depreciate rather than appreciate is because the improvements to the land don't count towards the overall value of the title unit. That's almost the exact opposite of what happens in most western countries. It also explains why in Japan people don't tend to do any maintenance or updates to property and why they prefer to run a property down and then tear down and rebuild new.
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Old Nov 6, 17, 10:52 pm #5
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Someone described the entire process they took, from finding land to the one-year checkup: http://lundman.net/wiki/index.php/Tokyo_house
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Old Nov 7, 17, 1:24 am #6

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Quote:
Originally Posted by JamesBigglesworth View Post
IMO, no one in any country should ever consider their personal home an investment. It's a place to live. Capital appreciation is a nice byproduct, if it occurs. Counting on it or expecting it is a recipe for disaster. Investment properties are investments. Personal property is for living in.
Well, I respectfully disagree. Different people have different reasons for buying instead of renting, and Jpn is different than US and, even within US, one market (area) is different than another. I and many others in my circle would've never invested in a home here in the US in our particular market, if we didn't think that a home purchase was a good investment. Rental living can be so pampering and carefree here in the US that a lot of us would choose to rent if it weren't for the finances, myself included.

You make some assumptions based on past trends in your market, and calculate the cost of living in your purchased home for x number of years:
(Down payment + total mortgage payments + total maintenance costs + total property taxes + total insurances + costs of buying and selling home + capital gain tax on home sale) - (Sale price of home - Mortgage balance)

If you calculate that your total rent during those x years is expected to far exceed the above, then buying a home is a good investment. In my market, even with very conservative estimates, cost of renting is many-folds higher than the cost of living in a purchased home over a 20-year period. But the same may not apply to another US market where home prices are more stagnant. Certainly I can't see that being the case in Jpn. Not that I know enough about Jpn home-buying process to be able to say that the above formula is applicable to Jpn.

Quote:
Originally Posted by armagebedar View Post
Someone described the entire process they took, from finding land to the one-year checkup: http://lundman.net/wiki/index.php/Tokyo_house
Thanks a lot for this link!
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Old Nov 7, 17, 8:28 am #7

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Quote:
Originally Posted by keihin_242 View Post

Biggest priority is earthquake safety, which Sekisui House and PanaHome appear to be best at. But I could be wrong about that.
OP, I remember Mitsui Home advertises their products with superior durability for earthquakes.
http://mitsuihome.co.jp/lp/jikken/
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Old Nov 7, 17, 2:48 pm #8

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Quote:
Originally Posted by evergrn View Post
(Down payment + total mortgage payments + total maintenance costs + total property taxes + total insurances + costs of buying and selling home + capital gain tax on home sale) - (Sale price of home - Mortgage balance)
You missed the property/mortgage deductions from your taxable income if you itemize
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Old Nov 7, 17, 9:05 pm #9

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Originally Posted by blitzen View Post
You missed the property/mortgage deductions from your taxable income if you itemize
Okay, I knew I was missing something.
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Old Nov 8, 17, 7:14 pm #10

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Quote:
Originally Posted by evergrn View Post
You make some assumptions based on past trends in your market, and calculate the cost of living in your purchased home for x number of years:
(Down payment + total mortgage payments + total maintenance costs + total property taxes + total insurances + costs of buying and selling home + capital gain tax on home sale) - (Sale price of home - Mortgage balance)

If you calculate that your total rent during those x years is expected to far exceed the above, then buying a home is a good investment.
I understand the emotional attraction of owning the home you live in, but it seldom makes any financial sense.

And how you look at the numbers should be based on the actual numbers and rates of return. For example, yes, you have to assume future numbers in terms of market appreciation. But that's a dangerous game when your projections are running out to 30 years typically. Areas change. Appreciation changes with them.

You also have to factor capital opportunity cost. Calculating something to "far exceed rent costs" is not a calculation. It's an emotional response to two projected numbers that are, at best, related guesstimates. Calculating the opportunity cost shows you what you're actually looking at.

I'm not saying that owning a home *can't ever* be a good idea. I'm saying that thinking of it in terms of being an investment is not a good way to think of it. Owning a home is an emotional choice, seldom a rational financial choice in most situations.
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Old Yesterday, 6:21 pm #11
mjm
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Quote:
Originally Posted by JamesBigglesworth View Post
I understand the emotional attraction of owning the home you live in, but it seldom makes any financial sense.

And how you look at the numbers should be based on the actual numbers and rates of return. For example, yes, you have to assume future numbers in terms of market appreciation. But that's a dangerous game when your projections are running out to 30 years typically. Areas change. Appreciation changes with them.

You also have to factor capital opportunity cost. Calculating something to "far exceed rent costs" is not a calculation. It's an emotional response to two projected numbers that are, at best, related guesstimates. Calculating the opportunity cost shows you what you're actually looking at.

I'm not saying that owning a home *can't ever* be a good idea. I'm saying that thinking of it in terms of being an investment is not a good way to think of it. Owning a home is an emotional choice, seldom a rational financial choice in most situations.
Well let’s see…

Renting home of the quality and in a location that one could buy the equivalent in would run from 500,000-800,000 per month and quite possibly more. With a 10% deposit and a .7 % rate (i.e. pretty standard terms today) you would be paying about 300,000 on a 8,000 man yen home in the three central wards or an even nicer one in say, Meguro ward.

With the purchase of the home comes 10 years of Jutaku Kojo (a tax credit for home buyers) which is 2% of your purchase price up to 4,000 manyen. That comes back to you each year when you do your nenmatsuchosei.

The home becomes an asset against which you can borrow and which you can sell for a profit if in the aforementioned areas. Or so the widely available public data proves for the past 30 years.

The opportunity cost of that same $100K invested here in Japan would not accrue at a rate to beat the savings you have created by buying.

When comparing apples to apples it most certainly does make financial sense to buy here in Japan.

I am not saying it is never an emotional choice to want to own your own home, but just the numbers make it a rational one.
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Old Today, 12:52 am #12

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Quote:
Originally Posted by mjm View Post
Well let’s see…

Renting home of the quality and in a location that one could buy the equivalent in would run from 500,000-800,000 per month and quite possibly more. With a 10% deposit and a .7 % rate (i.e. pretty standard terms today) you would be paying about 300,000 on a 8,000 man yen home in the three central wards or an even nicer one in say, Meguro ward.

With the purchase of the home comes 10 years of Jutaku Kojo (a tax credit for home buyers) which is 2% of your purchase price up to 4,000 manyen. That comes back to you each year when you do your nenmatsuchosei.

The home becomes an asset against which you can borrow and which you can sell for a profit if in the aforementioned areas. Or so the widely available public data proves for the past 30 years.

The opportunity cost of that same $100K invested here in Japan would not accrue at a rate to beat the savings you have created by buying.

When comparing apples to apples it most certainly does make financial sense to buy here in Japan.

I am not saying it is never an emotional choice to want to own your own home, but just the numbers make it a rational one.
Highly selective choice of numbers & situation is highly selective.

I agree that it can and might make sense in some very specific locations within any given area. But you mislead when you mention specific examples in specific areas and then extrapolate that to "it most certainly does make financial sense to buy here in Japan."

Contrast your numbers with building a 3Bd house in, say, Aomori just outside Hachinohe. Now, seeing as we're being selective in our choice of numbers/situations let's say the foreigner doesn't qualify for a loan from a Japanese bank and is stuck using an international bank at (que horror!) 3%, with no tax break because the lender is not Japanese domiciled.

But a 3Bd rental (less than 10 years old) can be had for under 50k a month. And investments, particularly for non-Japanese builders (which we are talking about), are global so I can happily invest in, say, NZ and get 6% return without much effort.

I'm all for apples to apples comparisons and considerations. You're not making them. All I'm saying is that the numbers require more work than you're saying before someone decides what is best for their situation.

Oh, and looking at the data, the number of areas where *residential housing* appreciates in Japan is exactly *zero*. *Land* is valued and appreciates. Improvements (ir. buildings) aren't taken into consideration in ratable value or general residential real estate - although the cost to demolish and existing building can affect the land value. Residential housing in Japan only depreciates with some very rare exceptions. That's why the government gives tax breaks - to encourage people to build new. Its why, as I said up thread, people usually don't do much in the way of maintenance or updates on their homes.
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Old Today, 5:57 am #13

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Re: buying vs owning, one big factor in Japan to remember is discrimination against the elderly, in that landlords don't want to rent to elderly people, even if they have a guarantor and can pass all the checks.

Re: which builder is better - basically they are all using subcontractors for everything outside of designing and marketing it, so basically they are all the same. The best recommendation would be to go and make sure you are happy with it.
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Old Today, 3:01 pm #14

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@ JameBigglesworth:

I think mjm's point was, it can make sense to buy instead of rent in Jpn and this is an example of how. I don't think his intention was to make a blanket statement to say it makes sense to buy everywhere in Jpn. I don't think it's worth pouncing on just because he may have typed 'does' instead of 'can' or didn't elaborate further with a couple extra words he could've used.

On the other hand, your original comment was: IMO, no one in any country should ever consider their personal home an investment. But again, there are many markets within US where buying clearly makes sense from financial standpoint, and then there are many others where it doesn't. Apparently mjm is saying the same applies in Jpn.

Quote:
Originally Posted by JamesBigglesworth View Post
Oh, and looking at the data, the number of areas where *residential housing* appreciates in Japan is exactly *zero*. *Land* is valued and appreciates. Improvements (ir. buildings) aren't taken into consideration in ratable value or general residential real estate - although the cost to demolish and existing building can affect the land value. Residential housing in Japan only depreciates with some very rare exceptions.
I don't have much insight into this, but I'm sure you're right about this. Of course buildings depreciate in value over time, but I've read that this is particularly fast and furious in Jpn to the extent that a 20yo house is worth very little in and of itself. In my area, 20yo homes are considered relatively new and move-in ready, and people usually don't remodel homes that are <20yo.
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Old Today, 3:06 pm #15

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Quote:
Originally Posted by acregal View Post
Re: buying vs owning, one big factor in Japan to remember is discrimination against the elderly, in that landlords don't want to rent to elderly people, even if they have a guarantor and can pass all the checks.
I've read about this. It's a good point. All this talk about respect towards elderly in Jpn. Yet such age discrimination with employment, housing.
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