Before construction could start we had to dig a well. Though our land was nominally within a housing development, it was a rather small one; basically a piece of wooded property surrounded by farmland that had been sold to a real estate company, which had divided it up for sale. But calling it a “housing development” is pushing it, since the usual infrastructure wasn’t available: no waterworks, sewerage, or gas lines. Technically, the land isn’t zoned for residences. It exists in that bureaucratic limbo known as shigaika chosei kuiki, which means an “area being adjusted for urban use,” but for all intents and purposes it’s land that does not have infrastructure but nevertheless is being sold for a profit. We cannot actually build on the land until the local land authority gives us permission, so buying it before the fact would seem to entail a risk, but these kinds of sales happen all the time and are always approved. We could see that for ourselves, since there were already five finished houses in this development and they had gone through the same thing. Over the past three years we had looked at many properties that were also classified as shigaika chosei kuiki, and in many ways they were more to our liking since lots that were already approved for residential construction tended to be in housing developments built by developers, meaning they were densely populated, and we wanted more breathing room. The thing about infrastructure is that most of it is built by private or semi-private entities who aren’t going to extend utilities to areas where they won’t see a profit, and a dinky little housing development of eight homes in an agricultural area where farming families have been living for generations without infrastructure isn’t worth it. Interestingly, the border of Chiba New Town is only a 10-minute walk from our property, and anything within that massive, 40-year-old development project, which incorporates portions of three cities, has access to all the usual infrastructure. But proximity means nothing. We might as well be living on the moon. Though we had already paid for the land and gave the go ahead to have the well dug, we called up the semi-public water authority whose bailiwick was closest to our property and asked about future prospects of waterworks being extended to our neck of the woods. We were essentially told that it would never happen. A little more research revealed that water usage throughout Japan peaked around 2001 and has been dropping ever since, and because local water authorities’ funding comes from customer billing and not from any public outlay they have less money with which to lay new pipe than they had in the past, so there’s absolutely no incentive to extend waterworks to any areas except those that guarantee a large customer base. (more…)
The design for our house came together quickly, because it was so simple. In fact, we kept thinking that whatever form it took the house would never be simple enough. Each item that went into the house was going to cost us, so we didn’t want a wall or a door or even an electrical outlet that we didn’t need. It’s one of the reasons we chose A-1, because every plank and screw is subject to our approval, and while the simplicity of our basic idea made it quick and easy to plan, refining the design took a bit more time.
The initial estimate was close to ¥14 million, which is reasonable but more than we originally wanted to pay given what the land had cost us. The basic A-1 design our plan was based on was less than ¥11 million. Most of the difference was taken up by the design fee and some custom add-ons, like the extra toilet. So we scrutinized the plans. Did we really need a door to the office on the first floor? Would a mail slot be cheaper than a mailbox? Could we find less expensive lighting fixtures on our own than the ones that A-1 would purchase through its usual supplier? Note that we weren’t being cheap for the sake of being cheap. Several decisions actually cost us more than if we had let A-1 go its normal route. The bathroom on the second floor did not have a standard vanity unit, which would have been cheaper than the built-in sink and mirror combo we demanded. We hate bathroom vanities, but essentially it was keeping things simple that made us chose the combo. We gave in to the unit bath because on further inspection we didn’t think we could find a reasonably priced tradesman who could build the kind of Western bathroom we preferred. As antiseptic as we found unit baths, they tend to have more structural integrity and are longer-lasting than custom-made bathrooms, at least in Japan. And though we weren’t crazy about the standard system kitchen we felt we’d been forced to choose at Housetec, we didn’t need to buy overhead cabinets since it’s an open-style kitchen. We also opted for sliding doors for the upstairs bathroom and the downstairs toilet, and they are more expensive than conventional hinged doors. Sliding doors take up less room, and at 89 square meters comprising two floors the house doesn’t have any extra room to spare. We had already eliminated the usually requisite “balcony,” which in Japanese homes mainly functions as a clothes-hanging platform, and it saved us a lot. And since our house is essentially a big box there were fewer angles and thus less surface area. With A-1, real wood panel walls are standard, but for a bit extra you can have conventional white sheetrock walls, and for a bit less you can have OSB (oriented strand board), which we chose for the walls of the office, since they would eventually be covered by bookcases, so the look wasn’t going to be important. Originally, we opted to leave out a UHF-BS antenna unit on the roof, thinking we’d get cable or Internet TV, but after calling around to various cable and IPS companies discovered that such services weren’t yet available in our neck of the woods, which is slightly outside the Chiba New Town zone. In fact, they might not be available for some time, so we opted back in for the antenna unit, which may look sort of precarious on that nice, angled roof A-1 is building. In the name of simplicity again we asked them not to tile the genkan (foyer), but just leave it as bare concrete, and not just because it’s less money. We like bare concrete and since we included in the design a small recessed storage area just to the right of the genkan it would all be of a piece. We also wanted a lot of windows, which costs more than having less windows, though due to the usual “modular” Japanese design methodology, which bases all measurements on ikken multiples or portions of the length of a tatami (182 cm), we had to chose window sizes accordingly. Any other sizes would require custom work, which would mean going outside the modular parameters and thus cost a lot more. We’re fine with standard windows. (more…)
As quickly as we could we collected the necessary documents for JA. Since they asked for three years’ worth of tax information we not only had to go back to the Narita tax bureau, we had to go into Tokyo to ask for proof of local taxes that we paid to Arakawa Ward for the first half of 2011, since that’s where we were living. Also proof of health insurance payments. We wondered what we would have had to do if we’d moved much farther away. As it was, going into Tokyo was enough of a pain in the ass since the different offices always seem to be crowded.
We submitted all the documents to the loan officer, who said it would take a few weeks for them to look through them but he had already assured us we were good. At this point a curious thought occurred to us. We had told A-1 that we were going to borrow money from JA. We expected N to act put out since he had gone to the trouble of introducing us to SBI, but in the end he didn’t really care. As long as we had the money he couldn’t complain. But, in actuality, we didn’t have the money, and wouldn’t for a long time. A lending institution won’t transfer the funds attached to a loan for a new home, meaning one that is being occupied for the first time, until the home is ready to be occupied, and in our case that wouldn’t be until Christmas at the earliest. In fact, we hadn’t signed the contract with A-1 yet, though it had been drawn up. The sticking point for us was the payment schedule. First we had to pay the design fee up front, which was about half a million yen. Then when we sign the contract, we pay a portion of the construction cost, almost a third. And then, when the roof beams have been completed, about two months into contruction, we pay another third. The last payment is made when the house is completed. So that means before the money for the loan is transferred into our account, we have to pay two-thirds of the cost of the house on top of the money we had to shell out for the land. If we had bought a house already completed, then it would be no problem, but we’re having it built. In our case it isn’t that bad because we had initially planned to pay cash for everything, land and house, until we realized that we would have to increase our budget if we wanted to own a place that fit our minimum conditions and needs. So we do have enough cash to make all the payments. It’s just that we will be broke until the loan comes through. But what about people who don’t have that much cash on hand, people who are borrowing almost all of the money needed to build their houses? What if they’re buying a condo based on a design, meaning the actual structure won’t be completed for another year or two? Again, if you’re working with a developer or a builder, they will make everything as smooth as possible, since they will likely be working hand-in-hand with a lending institution. For people like us who are doing everything themselves, there are special intermediary loans called tsunagi-yushi that you can take out to make the initial and mid-term payments, but they require another screening process and often have higher interest rates. Since they’re usually paid back when the housing loan comes through the payments don’t last long, but during that period if the borrower is, say, paying rent, it could be a real burden, depending on how long it takes to put up the house or condo. So that’s another expense you might have to deal with if you’re building a house. (more…)
We went to Tsukuba on a Friday, and the following Monday the woman from SBI Mortgage called and said we had cleared the preliminary screening. She had already given us a checklist of the documents we would need to submit for the final screening and so we started to collect them. It’s a time-consuming process because many documents are required and you have to go to different government offices to get them. The woman had already photocopied our drivers licenses, national health cards, and three years worth of tax returns. Now we had to get real proof of our worth, so to speak. The easiest to obtain was proof of residence (juminhyo) from the local city office. The checklist still had gaikokujin toroku shomeisho, meaning proof of an alien registration card, but the Foreign Ministry had phased out registration cards last year. We could also pick up inkan shomeisho, meaning proof of registered seals, at city hall. In bureaucracy-obsessed Japan, seals remain the looniest relic, since anyone could go to the store and buy one with another person’s name on it and use it in that person’s stead. Signatures are still not commonly used for purposes of witness and certification, though they’re obviously more individual. In order to somehow safeguard the seal as a means of certification you are supposed to register yours at your local government office, and then when called upon by a party with whom you are drawing up a contract you bring that party “proof” from the local government office that the seal you are using is kosher, though I have no idea how counterpart parties check this evidence unless they’re experts in wood-block printing.
A bit more difficult to secure was proof of our income for the last two years. The copies of our joint tax return were used for the preliminary screening but for the next phase they needed actual documents from both the national and local tax bureaus where we lived, which meant taking a trip to Narita as well as a trip into Tokyo, since we lived in Arakawa Ward for the first six months of 2011. In Narita we could also go to the local branch office of the Justice Ministry to obtain records on the land we were planning to buy–history of ownership as well as the official registered survey map of the plot, or, in our case, plots, since the land we were buying was actually two adjoining lots, one about 200 square meters and the other a mere 20 square meters. This smaller plot would prove to be a hassle, but more on that in a later post. On Tuesday we took a trip to Narita to get the documents we could. (more…)
Since the local branch of JA Bank is close to where we live, we decided to drop in and see what they could offer before setting out for Tsukuba and our rendezvous with SBI Mortgage. Though we had been virtually assured by N that SBI would lend us the money we needed, we wondered if we could get better terms at JA. Perhaps more significantly, we wanted to keep matters close to home. If we were going to borrow money we preferred it be from someone we could interact with whenever we needed to. We also liked the idea of doing business with people in our own community, especially now that we were thinking of planting roots in that community. SBI Mortgage, by virtue of its “money store” image, seemed more like a chain outlet.
The loan officer who met with us at JA was an efficient, overly friendly man in his late 30s. He listened patiently to our singular tale, a streamlined version of the one we related in our last post. When we pretended to be interested in Tama Home’s products two years ago we were honest about our income because we felt it was a good way of exiting the conversation after getting the information we sought, but the salesman had called our bluff (in a manner of speaking; there was no reason to think he didn’t believe we were sincere) by telling us that our budget was unrealistic, even though Tama Home did sell houses that were less than ¥10 million. As for our ¥2 million annual salary issue, he said it was not a problem, which is why he suggested JA Bank, and that’s why we were here.
Though we had brought along tax documents we weren’t quite expecting to make a formal application. We simply wanted to know what our chances were of getting a loan and what the terms would be if approved. To the JA loan officer it was pointless to explain what could happen; better to just apply and see how things turned out. In fact, he made copies of every document we had with us. He was careful to stress what we would eventually come to understand was the most important aspect of getting a home loan, which is that the lending institution needs to see what it was you were buying. They were not interested in hypotheticals. Ideally, we had thought that if you were going to borrow money, you should find out what the bank was willing to lend you, but that’s not how it works. You had to bring them something. It was as central to their decision as your income or credit history. (more…)
Once you embark on a certain course of action, even if the motivation is basically speculative, matters often progress of their own accord. Though we hadn’t yet secured the plot of land we liked, the fact that for a month it was ours for the taking made us feel strangely possessive of it. It is only a ten-minute bike ride from our apartment, and in the weeks after our visit to A-1 we would drop by just to have a look at it and imagine what a house might look like sitting on it. Sometimes we would address a pressing consideration, such as: What is the Internet capability in this leafy corner of the city? It was a real consideration since our work depends on online access, and one day we asked the carpenter next door, who just happened to be outside puttering around, what sort of access he had. He didn’t, and didn’t seem to know anything about it since he didn’t need the Internet for his work and wasn’t a technophile. While we admired his resistance to the irresistible pull of modern life we also felt slightly taken aback. Were we thinking of moving into the Ozarks?
Later, we met another neighbor who assured us that optical fiber connections were available in the area, but the seed had already been planted. What about the water we’d be consuming from the well we’d have to dig? The carpenter said it tasted terrible and that he only used it for washing, while the other neighbor thought it tasted better than the city water he used to drink. We knew there was no accounting for taste, but that’s quite a gap in perception. The realtor said something about the depth of the wells: that the carpenter’s was shallow and the other neighbor’s much deeper, but that information only made us more confused and obligated to do even more research into the matter. In other words, coming to a decision about the land was going to be even more complicated than we’d thought. (more…)
New housing will always be a prime economic mover in Japan even as the population drops, so the sector needs all the help it can get. Right now new housing is seeing a boost due to the expected consumption tax increase next year. Buyers are trying to make deals before the tax goes into effect, but what happens afterwards? Real estate and housing companies are worried there will be an even bigger slump once that happens, so the government says it plans to allow financing rates of up to 100 percent for long-term fixed rate loans, or so-called Flat 35 mortgages. That means borrowers who qualify don’t have to put any money down. At present, a borrower has to put at least 10 percent down.
This happened once before. In 2009, when the recession was at its worst, the government allowed no-down-payment loans but it was a temporary measure and ended in March 2012. Of course, some people are worried since such loans are considered risky, so as part of the proposal screening of applicants will be made stricter, though the details have yet to be worked out. In addition, some of the Liberal Democratic Party’s ruling coalition partners want to provide handouts of up to ¥300,000 to people who are approved for housing loans but whose income is less than ¥5.1 million a year. This handout would offset the effect of the consumption tax increase. (more…)
Here’s this month’s Home Truths column in the Japan Times, which is about the Chiba New Town development project, where we happen to live. To clarify something that may not be apparent in the article, it’s a very nice place to live. As pointed out, the people who reside here enjoy a mix of urban convenience and unspoiled nature, though one of the points we tried to make is that if the New Town scheme had gone ahead as originally planned, it might have been more congested and less attractive, but it was never going to happen that way because of the area and the way it was developed. As it is, the urban sectors have plenty of well laid-out parks, the roads are all lined with wide sidewalks and bicycle lanes (which few people use since everyone drives), there are plenty of retail outlets offering a wide variety of very cheap merchandise, and just minutes’ walk from any station in the NT area you are in deep countryside: rice paddies surrounded by well-kept forests. And while the Hokuso Line is expensive, it is extremely convenient to both central Tokyo (one hour to Nihohbashi without transfer) and Narita Airport (20 minutes), and, probably because it is expensive, it’s never crowded.
Based on a rough survey of the land being developed now for residential homes, lots of approximately 200 square meters will be going for ¥10-15 million, or about ¥50,000 per square meter. So far, tracts being prepared are located 10 to 25 minutes by foot from Inzai Makinohara Station. We haven’t seen too much land being prepared near other stations. When the project started in the 70s, condominiums were promoted, and there are still some large condo complexes near the various stations in the NT area that have vacant units. One, called Doors near Inzai Makinohara Station (five minutes), is only about half filled. Apartments were first put on sale more than two years ago, and since then the developer has decreased the price at least twice, which probably upsets people who already bought. You can get a brand new condo of 70 square meters for only ¥19 million, but if you go a little farther from the station you can probably have a house built for less than ¥10 million more than that. UR, who will be selling most of these plots to real estate and housing companies, will want to get as much money as possible in order to pay down its debt, but with so much being developed at one time and demand unknown, it’s likely that those prices will come down in a short period of time. Chiba, of course, is the cheapest place to live in the Tokyo metropolitan area, and since its population decreases every year, it will become even cheaper just for that reason. Though the New Town has been a failure in terms of what a New Town is supposed to accomplish fiscally, Chiba New Town is a reasonably priced, attractive alternative to its counterparts in other places in the Kanto area. And now that we think about it, maybe that’s the reason Inzai was selected as the most comfortable city in Japan.
When we first met the realtor who was selling the land we were interested in at the actual lot, he brought with him a rough visual of the sort of house that could be built on it, along with a mock loan repayment scheme to show how cheap the monthly payments could be. At that point we hadn’t talked about our financial situation or what sort of house we wanted to build, and if we were impressed by the agent’s proactive salesmanship we were also leery of what it might lead to. Of course he wanted a sale on the land, but at ¥5.3 million his company wasn’t going to make a whole lot of money on the deal. What they wanted was also to build our house for us, and help us secure a mortgage. They were basically acting as developers, and had purchased this tract of land (relatively cheaply, because it was still being “adjusted for urban zoning”) with the idea that they could broker deals for houses and make even more money. Later, we would find out that of the five houses already constructed in the subdivision, only one had been built through the realtor. What impressed us about their offer wasn’t the forward thinking but rather the price. The agent said they could build us a house for ¥300,000 per tsubo (3.3 square meters) of floor area. In our mind we estimated that we wouldn’t need more than 30 tsubo, which means they could build us a house for ¥9 million, which was well within our budget. So while we didn’t say we would work with his company, we didn’t say we wouldn’t either.
We were still interested in using a housing company headquartered in Ibaraki called A-1, which we wrote about here in early 2012. Last winter, in fact, after we abandoned our plans to buy a used house or condo and renovate it, we rented a car and drove to their offices near Kasumigaura and interviewed the company president. Kazumi Arai comes across as more of a business philosopher than a businessman, someone with a vision who has assembled a staff that can realize his vision in a practical way. (Later, we learned that Arai has an architect’s license) The explanation he gave us of his company was almost identical to the one he gave to The Japan Times, which is where we first learned about A-1, and, frankly, it was the philosophy that attracted us. Arai’s position is that owning a house should not be an impossible dream, but because of the cost of land in Japan and the way the housing industry is structured, the average person looks upon it as an almost insurmountable financial undertaking. He believes people pay way too much for homes. A-1 keeps costs down in a variety of ways, mainly by cutting promotional budgets. The company does not advertise. It does not build model homes. Also, it is mainly a design company. It offers several basic floor plans that range in price from ¥9 to ¥11 million, and the customer then tells the architect what he/she wants. The architect amends the basic design accordingly, which means A-1 makes money on the design aspects, but it also helps the customer save money on materials. For instance, most major home builders’ designs have lots of rooms and walls, which add to the cost of a house, but A-1 points out that hallways are often unnecessary, and if the layout is carefully considered fewer walls can be built without any loss of privacy. In addition, their workers are trained in a variety of skills to save on labor costs. For each job, a builder usually has to hire someone skilled in that particular trade, be it plumbing, dry wall, whatever. A-1 tries to hire as few people as possible. (more…)
Having lost interest in the land in Makinosato, we felt as if we’d retreated to square one. There was still that lot near Shimosa-Manzaki station, but besides being really cheap it didn’t offer anything we could get excited about. Our disinterest was rooted in the same feeling that made it easy to drop the Makinosato plan: We didn’t really want to live in a subdivision, though we also understood that if we wanted to remain in this particular stretch of Chiba Prefecture and weren’t going to pay more than ¥5 million, the only lots we could afford were in subdivisions. This feeling turned to something like despair when several large tracts of land close to our train station were suddenly opened for development. As mentioned elsewhere in this blog, we live in what is called Chiba New Town, which stretches across parts of three cities in northern Chiba Prefecture. As a housing and commercial project developed by the government housing authority in the 1960s and 70s, management eventually fell to the authority’s semi-private successor, UR, which was stuck with a lot of land that was never developed because Chiba New Town didn’t attract residents and businesses in the numbers the government originally envisioned. But the government has also given UR a deadline to get out of the land development business and that deadline is next March. So suddenly, all these overgrown fields bordering the Hokuso Line are being bulldozed and subdivided, and several weeks ago housing companies and real estate agents started advertising the plots, which start at about ¥11 million for 200 square meters. So even though there will be hundreds of plots made available soon in subdivisions we would probably prefer not living in, we at least have to double our land purchase budget in order to buy one.
So after a short respite we resumed our seemingly endless Internet search, checking portal sites for anything–land, condos, used houses–that might offer us something appealing. In terms of land, we increased the budget to see what was available. Portal sites have series of buttons you check to narrow the search, and land prices are normally tiered in multiples of ¥5 million. In the past we’d input the very smallest amount, but now we broadened the search to ¥10 million in the areas we were interested in. There was a lot more available, obviously, and since we’ve been at this thing a while we’ve become better at rejecting properties without looking too closely at them. (more…)