So when’s the housing bubble bursting?

Dr. Truth

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BGOL Investor
Arrive on the scene as Dr. TRaw'uth.
Fresh off the plane through the airport
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DC_Dude

Rising Star
BGOL Investor

Japan Has Millions of Empty Houses. Want to Buy One for $25,000?​

With a shrinking population and more than 10 million abandoned properties, the country is straining to match houses with curious buyers.

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Jaya Thursfield, an Australian who moved to Japan 2017 with his wife Chihiro, bought an abandoned house not far from Tokyo for 3 million yen, or around $23,000, in 2019, and set about renovating it.Credit...Andrew Faulk for The New York Times

By Tim Hornyak
April 17, 2023Updated 11:40 a.m. ET
When Jaya Thursfield found a house he wanted to buy in Japan a few years ago, friends and family told him to forget it. The place wasn’t worth the trouble, they said. After all, it stood in a forest of shoulder-high weeds after being abandoned about seven years earlier — one of the millions of vacant houses known as akiya, Japanese for “empty house” — throughout the country.
But Mr. Thursfield, 46, an Australian software developer, wasn’t deterred. Through the overgrown garden, he could see it was special: The black roof tiles cascaded down to slightly curving eaves that were much higher off the ground than those of most houses. The entrance hall had its own gabled tile roof. If the 2,700-square-foot house looked more like a Buddhist temple than a farmhouse, it’s because it had been built by a temple architect in 1989.
Mr. Thursfield and his Japanese-born wife, Chihiro, had moved to Japan from London in 2017 with their two young sons and a dream of buying a home with a big yard. The plan was to purchase a vacant lot and build a house on it, but land is expensive in Japan and their budget wouldn’t allow it. So they turned to the growing supply of abandoned houses, which are cheaper and often come with more land.

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The Thursfields’ house in 2019, shortly after they bought it. The house had been deserted after the previous owner’s family refused to inherit it upon the owner’s death.Credit...Andrew Faulk for The New York Times

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Mr. Thursfield has done much of the renovation work himself, including woodworking.Credit...Andrew Faulk for The New York Times
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The couple have spent about $150,000 on renovations, and there’s more to do.Credit...Andrew Faulk for The New York Times

They’re far from the only ones. “We would never have been able to afford a house of this quality and size if it wasn’t an akiya,” said Ms. Thursfield, 49. “And while many Japanese don’t like used homes, foreigners see a house that is cheap and are more willing to reuse and renovate to their tastes and budget.”

As Japan’s population shrinks and more properties go unclaimed, an emerging segment of buyers, feeling less tethered to overcrowded cities, is seeking out rural architecture in need of some love. The most recent government data, from the 2018 Housing and Land survey, reported about 8.5 million akiya across the country — roughly 14 percent of the country’s overall housing stock — but observers say there are many more today. The Nomura Research Institute puts the number at more than 11 million, and predicts that akiya could exceed 30 percent of all houses in Japan by 2033.

The Thursfields’ house, which sits among the paddies in southern Ibaraki Prefecture, about 45 minutes from central Tokyo, had been deserted after the previous owner’s family refused to inherit it upon the owner’s death. The local municipality took it over and put it up for auction with a 5 million yen ($38,000) minimum bid, but it failed to sell.

When it landed on the block again, Mr. Thursfield decided to try his luck. After giving it a quick inspection with an architect friend and finding no major issues despite the years of neglect, he nabbed the house for 3 million yen, about $23,000.



Houses in Japan typically decrease in value over time until they are worthless — the cultural legacy of post-World War II construction and shifting building codes — with only the land retaining value. Owners feel little incentive to maintain an aging house, and buyers often seek to demolish them and start fresh. But that can be expensive.
Others aim to preserve what’s there. “There was no way we wanted to knock it down and build something new. It was too beautiful. So we decided to renovate instead,” Mr. Thursfield said. “I’ve always been someone who likes to jump in the deep end, take a few risks, and learn new things, so I was confident that we would manage somehow.”
Since buying the farmhouse in 2019, the couple have spent about $150,000 on renovations, and there’s more to do. Mr. Thursfield has documented the project on YouTube, drawing more than 200,000 subscribers.
While the Thursfields’ house had been abandoned by the previous owner’s heirs, some homeowners die without ever naming an inheritor. Others leave their properties to relatives who refuse to sell family land out of respect for their elders, leaving the house to wither.

“In rural areas, there is a long history of ancestral owners of akiya living in the houses and on the land,” said Kazunobu Tsutsui, a professor of rural geography and economics at Tottori University who lives in a renovated akiya built more than a century ago. “Therefore, even after moving to the city, families will not give up their akiya easily.”
Now officials on both local and national levels are taking steps to give them a push.

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An akiya sat idle in Nagasaki, Japan, earlier this year.Credit...Tim Hornyak
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Inside, detritus left behind by the previous owners gathers dust.Credit...Tim Hornyak

“Poorly maintained akiya can mar the scenery as well as endanger residents’ lives and property if they collapse,” said Kazuhiro Nagao, a city official in Sakata, along the west coast, where heavy snowfall can damage unattended structures. “We’re partly subsidizing demolitions, collecting neighborhood association reports on akiya, and trying to make owners aware of the problem by holding briefings.”
Though the akiya problem has not had a direct impact on sales in urban markets, where high-rises continue to go up, the potential hazards to communities posed by empty houses are growing along with their numbers, according to Akira Daido, chief consultant at the Nomura Research Institute’s Consulting Division. Mr. Daido pointed to a recent legal revision that allows local authorities to effectively raise the property taxes on neglected houses if the owners ignore municipal requests to maintain or demolish them. In another sign of rising concern, the government has approved a plan by the city of Kyoto, where inventory is tight yet some 15,000 houses sit empty, to tax the owners of those empty homes — a first in Japan.
Akiya are increasingly seen not just as a threat to suburban and rural markets, but to the emotional health of the country, sparking family disputes over inherited properties. That, in turn, has led to a cottage industry of akiya consultants like Takamitsu Wada, the chief executive of Akiya Katsuyo, who acts as a counselor for squabbling relatives, often urging them to act before their properties become a lost cause.

“In many cases, the parents die without making clear their wishes regarding the family home, or they develop dementia and find it difficult to discuss these things,” Mr. Wada said. “In such cases, the children may feel guilty about getting rid of the family home, and may often choose to leave it unoccupied.”
Municipalities across Japan are also compiling listings of vacant houses for sale or rent. Known as “akiya banks,” they are often bare-bones web pages with a few underwhelming photos. Some have partnered with private-sector companies like At Home, which currently lists akiya in 658 of Japan’s 1,741 municipalities.

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Matthew Ketchum and Parker Allen, the founders of Akiya & Inaka, in the Hachioji area of Tokyo. The company is capitalizing on the akiya glut, matching vacant homes with curious buyers.Credit...Andrew Faulk for The New York Times

“Akiya banks are run by municipal office workers, the majority of which often do not have any experience in real estate,” said, Matthew Ketchum, a Pittsburgh native and co-founder of Akiya & Inaka, a Tokyo-based real estate consultancy. “The existing solutions do not align with the needs of modern buyers and sellers.”
Mr. Ketchum’s firm is one of several that have sprung up to capitalize on the akiya glut, matching vacant homes with curious buyers. Akiya & Inaka’s listings include a 2,195-square-foot home built in 1983 in the suburb of Hachioji, Tokyo, with a small garden and a reception room featuring a raised tatami floor, tokonoma alcove and a rare wickerwork ceiling of woven cedar. The property is listed at 36 million yen, about $272,000.

“Every Japanese agent we talked to advised us to demolish this place,” said the house’s owner, Takahiro Okada, 85, a retired journalist. He and his wife Reiko, 86, had been renting out the house but decided to sell after their tenant left last year. Their children weren’t interested in it, so the property lingered. Different owners might have torn it down and sold the land.
“If we all do that, we’re losing Japanese culture,” Ms. Okada said. “When seen from an international perspective, and through the eyes of foreigners, Japanese things can have inherent uniqueness and value.”
Mr. Ketchum and his partner, Parker J. Allen, said they’re now fielding about five times the number of inquiries as when they began in 2020. “At first, we were getting most of our inquiries from Japan residents, Australians and Singaporeans,” Mr. Ketchum said. “That has changed now, with the vast majority of our international clients being based in the U.S.”

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Reiko, left, and Takahiro Okada in the house they’re selling through Akiya & Inaka. “Every Japanese agent we talked to advised us to demolish this place,” Mr. Okada said.Credit...Andrew Faulk for The New York Times

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The exterior of the Okadas’ house, in the Hachioji area of western Tokyo.Credit...Andrew Faulk for The New York Times

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The property is listed at 36 million yen, or about $272,000.Credit...Andrew Faulk for The New York Times

Many clients have been spurred by the pandemic, which “definitely changed the mind-set of people living in Japan regarding the idea of rural living,” Mr. Allen said. “The fact that property in the Japanese countryside is by and large undervalued and there are viable properties that are almost turnkey has finally dawned on these people.”

One person it did not dawn on recently is Alex Kerr, an author and Japanologist originally from Maryland, who became an akiya owner in 1973 when he acquired an abandoned country house (known as a minka) in the mountains of Shikoku, the smallest of Japan’s four main islands, for $1,800.

Named Chiiori, or House of the Flute, the thatched-roof aerie is about 300 years old. Inside, it’s a shadowy space of polished wood floorboards, a large sunken irori hearth and giant overhead rafters wreathed in smoke. Outside, mist rises from the Kumatani River in the gorge below.

Mr. Kerr, 70, is the first to admit that akiya can be money pits. He has spent decades and roughly $700,000 (“about half” of which came from a government grant, he said) maintaining it, and now rents it out as a guesthouse. It’s one of about 40 derelict Japanese properties he has restored over the years, all the while preaching the importance of conservation and rural revitalization to municipalities, companies and homeowners who may not know what makes their properties special.

“Many cultures have wooden architecture, but when it comes to the techniques of carpentry, Japan overwhelmingly leads the world in joinery and use of materials, as well as use of space and choreography,” said Mr. Kerr, whose books include the memoir “Lost Japan.” “When it comes to old minka houses, you have all that, set in a natural environment, and within the context of being cheap. In the Cotswolds, wooden houses cost a fortune, but in Japan they’re being thrown away.”

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Alex Kerr bought an abandoned country house in 1973 in the mountains of Shikoku, the smallest of Japan’s four main islands, for $1,800.Credit...Courtesy of Alex Kerr

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Mr. Kerr’s house, named Chiiori, or “House of the Flute,” is about 300 years old.Credit...Courtesy of Alex Kerr
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Mr. Kerr has spent about $700,000 maintaining the house, some of which came from a government grant.Credit...Courtesy of Alex Ker

But he has taken note as real estate companies have begun to snap up habitable antique houses and market them to non-Japanese luxury buyers. He also pointed to young international buyers opening Airbnb rentals in erstwhile akiya and attending events like minka conferences.
Last year, the British videographer Sam King and his wife, Nanami Sakurai, fled Tokyo with the help of an architect who introduced them to an unlisted akiya in the mountains of Otsuki, 50 miles west of Tokyo.
The couple wanted to be “closer to nature on our days off,” said Mr. King, 35. “We also could not afford to buy so much as a shoe box in the city, so the thought of being able to get somewhere with a lot more space was very appealing so we can start a family and also own pets without any trouble.”

The house, in a depopulated community of mostly older residents, had been abandoned for roughly two years after the death of its owner. The price was 12 million yen, or about $88,000.
Set in a garden among plum and kiwi trees, the cottage has traditional tatami mats, shoji-paper and fusuma sliding doors, chunky wooden cabinets and tokonoma alcoves. The previous owner left behind a trove of personal possessions — paintings of Mt. Fuji, rolls of Japanese calligraphy, old tape players, kites, guitars, skis, crockery. The house is about 50 years old and needs to be updated to modern standards. Mr. King estimated the initial renovations, such as redoing the kitchen and bathroom, will cost $20,000 to $30,000. It’s well worth it to escape the city.
“We’d like to improve upon it quite a bit as it’s going to be our home, so we’ll probably end up spending over $100,000 in total on the project,” he said. “But we’ll hopefully end up with our dream home.”


Wow why so many empty homes?
 

blackbull1970

The Black Bastard
Platinum Member
New Yorkers must earn this much to live like they make $100K

By Linda Schmidt
April 17, 2023


In a new analysis, SmartAsset broke down how much NYC residents need to make a year in order to equal the purchasing power of a $100,000 salary. "We found that New York City residents on average need more than $312,000 just to take home the equivalent of $100,000," said DeJohn.

[​
 

DC_Dude

Rising Star
BGOL Investor
New Yorkers must earn this much to live like they make $100K

By Linda Schmidt
April 17, 2023


In a new analysis, SmartAsset broke down how much NYC residents need to make a year in order to equal the purchasing power of a $100,000 salary. "We found that New York City residents on average need more than $312,000 just to take home the equivalent of $100,000," said DeJohn.

[​


That's crazy....
 

praetor

Rising Star
OG Investor
So what has changed? Buying a home was never cheap or easy unless you talking the 50’s, 60’s or 70’s. Maybe up until the late 80’s?

Student loan debt.

"The largest factor weighing down on Millennials’ net worths is the massive amount of student loan debt amassed by this generation – a trend powered by the rising costs of college tuition and greater demand for higher education now that more careers require a university degree, or even a graduate degree."

"Early career Black Gen X families’ median net worth in 2001 was the lowest of all racial/ethnic groups, at $14,000. But this racial disparity has only gotten worse: Black Millennial families' median net worth is only $1,790"

"Black Millennial family student loan debt comprises 42.8 percent of their debt — more than a five-fold increase from the proportion of student loan debt of Black Generation X families at the same age"

 

Jupiter-One

Potential Star
Registered
I don't think it's ever going to burst and if so NO TIME SOON...These financiers learned their lesson in 2008 and even if we as a nation are in a position to absorb a housing crisis IT WONT HAPPEN because these financiers have gotten more inventive in their strategies...worst case scenario? The American Dream of home ownership becomes a lease and not a purchase option...FACTS
 

DC_Dude

Rising Star
BGOL Investor
I don't think it's ever going to burst and if so NO TIME SOON...These financiers learned their lesson in 2008 and even if we as a nation are in a position to absorb a housing crisis IT WONT HAPPEN because these financiers have gotten more inventive in their strategies...worst case scenario? The American Dream of home ownership becomes a lease and not a purchase option...FACTS
FACTS!!!!!!!!!!!

It's the reason why you these private equity firms are raising money to buy up homes to rent out...




Me and wifey just brought a home recently and that shit that happened in 2008 will never happen again. When I first bought my condo in 2012, the shit I had to go through, was crazy.....

If your credit ain't worth shit and your DTI ain't worth shit, you will not buying a home...

Hell the builder we went throught requires all customers to go through their financing algorithms FIRST to even be consider to buy any of their homes...
 

Llano

Rising Star
BGOL Investor
I really wonder who's in Biden's ear when they come with some of this shit. I'm looking for another rental property this fall so now I'm going to get penalized for having good credit.



 

praetor

Rising Star
OG Investor
I really wonder who's in Biden's ear when they come with some of this shit. I'm looking for another rental property this fall so now I'm going to get penalized for having good credit.





From what I'm reading, this equates to an extra $40/month on a $400k loan. It can also be avoided if you put 40% down instead of 20%.
 
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Dr. Truth

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I really wonder who's in Biden's ear when they come with some of this shit. I'm looking for another rental property this fall so now I'm going to get penalized for having good credit.




WTF is this shit? Is this for new buyers or current owners?
 

Dr. Truth

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BGOL Investor
If you have a 780 or above, you're good.

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Im not following so if my score is below 780 I have to pay more to help lower score people? This is bullshit, no way can this get passed. You can’t just throw some random shit out there and expect people to just agree when it hasn’t even been announced to the public
 

praetor

Rising Star
OG Investor
Im not following so if my score is below 780 I have to pay more to help lower score people? This is bullshit, no way can this get passed. You can’t just throw some random shit out there and expect people to just agree when it hasn’t even been announced to the public

Yeah, the values at the top are the loan-to-value percentage. So if you put 20% down with a credit score of 750, it'll cost you extra. In the worst case scenario, it's about $40/month extra on a $400k loan.

Here's an article from January:

 

Dr. Truth

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BGOL Investor
Yeah, the values at the top are the loan-to-value percentage. So if you put 20% down with a credit score of 750, it'll cost you extra. In the worst case scenario, it's about $40/month extra on a $400k loan.

Here's an article from January:

No way in hell this is legal nor can it pass without a vote from congress
 

praetor

Rising Star
OG Investor
No way in hell this is legal nor can it pass without a vote from congress

If it needed congressional approval I don't think it would already have an effective date. It appears that they've wanted to make the cost of owning a second home more expensive for some time now. They raised fees last year too.

This is from January of 2022:

"The Federal Housing Finance Agency announced it would be increasing upfront fees on second-home mortgages and on mortgages that finance homes with balances that exceed standard conforming loan limits."



 

DC_Dude

Rising Star
BGOL Investor

Hi Belle! I feel like I’ve been going through the 7 stages of grief. When I got the news a few months ago, I was angry, irritated, I thought it wasn’t fair because the optics made it so easy to feel that way.

The reality is there is just a complete re-risking at play with loan pricing. When you blend in the PMI and Automated Underwriting systems (AUS), the story starts making more sense.

The reduction in fees for low down payment or scores < 680 is mostly due to those loan approvals being much tougher to get. AUS’s did their job. The agencies then said, if the risk is managed through the approval process, why clobber these people further with higher rates. The diff between a 660 and 780 score is still about .50% better for the better credit borrower. They improved the 660 band, but it’s still much worse than those with great credit.

Without getting overly wordy from here, PMI is the great equalizer in that it gets VERY expensive for lower credit, lower down payment borrowers. But, the risk is mostly on those companies, not Fannie/Freddie.

Lastly, the real “subsidy” should be pointed towards the FTHB’s meeting income limits. They are getting the extreme hook-up in these fees being waived entirely, regardless of score. They still pay expensive PMI though. I like this rule. I want FTHB’s to have a better chance. I’m sick of move-up buyers becoming landlords and choking off inventory. Maybe making loans a touch more expensive for them will force them to sell the departing residence thus helping out with inventory??

I honestly could talk about this, and recent FHA changes for a solid 30 min before the picture starts making sense.

In the end, it’s not as bad as people think. More expensive for some, less expensive for others, but possibly more sensible for “the system” to work better.
 

Helico-pterFunk

Rising Star
BGOL Legend
H-Funk,

I would have never figured that Vancouver, Canada was ruthless like the article describes.

Thanks for posting the article.



You're welcome. Yeah - the downtown eastside (DTES) is pretty rough. The sheer volume of people, drug addiction, and of course mental health epidemic.

I used to do shelter resource work at a few Vancouver locations (around 2003 - 2004), and it was quite challenging in that the workload was overwhelming.
 
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