Buying for now rather than forever: never say never?

[kuma]

I appreciate that the consensus is that housebuying in Japan should ordinarily be a long-term plan, given the expected depreciation of the asset.

But as in another thread, sometimes circumstances (eg location, family size, school considerations, etc) mean rental options become severely limited, or even non-existent, and in any case, the quality on offer for purchase may exceed that on offer for rental.

Also, circumstances could mean that people have a window of mortgage eligibility while they are zangyou-ing it up; a window which may slam shut if they leave to pursue a freelance business at a more leisurely pace. (But still with confidence of keeping up with the mortgage repayments.)

Financially, what's the best way of assessing the depreciation of houses in a particular area? This is a rookie question: I have no knowledge of where to look for historical sale prices, etc.

But the numbers are only one bit of the equation, as other threads state. Quality of life and happiness are of course fundamentally important.

The relevance: this is a 'pothetical' question. I can foresee my family's window for mortgage eligibility closing for a while. The rental market has very limited options in our circumstances. There are some amazing properties for sale with 'forever' potential, but which could be 'for now' if we want to build our own place or fine-tune our location in the future. There are also some significantly cheaper houses which don't tick all the 'forever' boxes but do compare favourably with the local rental options.

Any thoughts? Any experiences of buying and then selling? I know, I know: don't buy unless you are thinking of the very long term. But what if the numbers (which would partly be an educated guess, as future sale price is unknown) make a case for an exit point 5 years down the road (a) not being a huge financial loss, but more pertinently, (b) potentially being a huge quality-of-life gain for the family?

[RetireJapan]

I always say buying a home is an emotional decision: you should be aware of the numbers in order not to make a mistake, but at the end of the day you're going to make the decision based on what you want

That said, you will be looking at 5-10% closing costs each time you buy and sell real estate in Japan. There will also be fees associated with getting a mortgage. If you get a reasonable idea of what these might be, along with the cost of ownership, you would be able to compare it with renting for a similar period.

Personally I wouldn't want to buy if I were not likely to live in the property for at least ten years or more.

[sugus]

There are always pros and cons for both choices.

If you want to see historical information and current data these links are very useful:

https://tochidai.info/
https://www.land.mlit.go.jp/webland_eng ... ainServlet

Buying property in Japan is certainly different than in other countries, as unless you decide to purchase in a centric area of a big city, I don't think it will retain its value over time.

In my case, we bought a renovated second hand manshion that was expensive compared to its actual value, but considering other factors that outweighed the price we ended up buying 5 years ago and don't regret our decision. Planning to stay long term.

We simply accepted that we have to live somewhere and that even in the worst case scenario we would be able to get some of our money back, whereas renting would mean 0 return. Also of course it's to do with the mortgage... once you fully pay it back, then it's yours and won't have to continue paying monthly rentals for the rest of your life.

Every situation is different of course...

[kuma]

Thanks, RJ and Sugus for the replies. And the links. Interesting stuff. I will look into my options, and may have further questions down the road.

[Tokyo]

As noted in the Legally reducing inheritance tax post, any property inherited gets assessed at half of the market rate. So leaving property can be decided advantageous to leaving cash. Not to mention the rent you don’t have to pay.

Buying a property is not straightforward in Japan but if you are buying into one of the larger urban areas, then any loss in value is minimal (probably unlikely) if you buy a place 10 years old or more (thereby avoiding the premium prices paid for new homes), centrally located within 5-10 minutes of train/subways, good schools, and supermarkets. These properties tend to be expensive but that’s because there are good reasons for their demand.

[kuma]

Interesting points re inheritance.

if you are buying into one of the larger urban areas, then any loss in value is minimal (probably unlikely) if you buy a place 10 years old or more (thereby avoiding the premium prices paid for new homes), centrally located within 5-10 minutes of train/subways, good schools, and supermarkets. These properties tend to be expensive but that’s because there are good reasons for their demand.

I’m considering houses in a few towns of about 10,000 people, in commuting distance to a city. Growing and attractive towns rather than ones facing depopulation issues. Good environment, schools, etc.

If, for the sake of example, a 20yo home is in good shape, is there a straightforward way of seeing its historical price information, or that of houses in a similar postcode?

[Tokyo]

I’m considering houses in a few towns of about 10,000 people, in commuting distance to a city. Growing and attractive towns rather than ones facing depopulation issues. Good environment, schools, etc.

If, for the sake of example, a 20yo home is in good shape, is there a straightforward way of seeing its historical price information, or that of houses in a similar postcode?

Historical price information can be easily obtained two ways. Firstly, Googling our manshon name gave us previous sales prices and dates. Secondly, any real estate agent has access to that data.

A 20 year old house will have lost a lot of its value so you should be paying basically only the land cost. The negative side is that if the area concerned was developed 20 years ago it will be full of oldies with very few young kids around. That was our situation for our first home (although in an outer suburb rather than a town) and those older kids NEVER return, having established lives of their own elsewhere, usually in larger cities. The area may not be depopulating now, but it may well be very soon.

[akiaji]

That said, you will be looking at 5-10% closing costs each time you buy and sell real estate in Japan.

This looks to be a bit on the higher side from I have experienced, both buying for personal and commercial use.

Although the agency fees range from 3-5% depending on the price of the property, I think you'd be looking at 3% in general (anything over 4 mil JPY). You'll have some legal fees and registration taxes, etc., but these should be relatively small. If you do a lot of refurbishing, you can tag on a couple million more JPY, though I would consider those more add-ons to the base costs.

Also good to keep in mind the rate the agency is applying is the upper limit, so there is room to negotiate. Never hurts to ask them to round the number down a little bit.

Curious to hear where you have seen scenarios up to 10% though!!

[Jansen]

Echoing Tokyo's experience regarding living in a developed area. I lived in a suburb outside tokyo that's probably 40 - 50 years old. My neighbours were mostly in the 70s or 80s, old enough that some have gone senile during my 5 years there.

The otherside of that coin is that, a lot of them moved (died) out, their large old houses were demolished then quickly replaced by two smaller tateuris on the same plot and quickly populated by young(er) people.

[captainspoke]

...
I’m considering houses in a few towns of about 10,000 people, in commuting distance to a city. Growing and attractive towns rather than ones facing depopulation issues. Good environment, schools, etc.
...

Apart from housing, this sounds a little towards the to-good-to-be-true side of what I read about japan--where is this magical place?

**

The area we are in now has kids again. It had some when we moved here, then it seemed everyone was old (older than us), and now there's been some rebuilding and younger families are around again. But that cycle has taken 30 years.