Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

[Belvegas]

speaking of Japan’s infamous housing bubble…

love to ski? want an apartment near the slopes and just a 2 hour bullet train ride from tokyo?

great news! there are plenty of older japanese desperate to unload their holiday home built/bought during the bubble.

1200 square feet
US $5,000 (wonder what was the original price back in the 80s? $500,000?)

https://www.himawari.com/yuzawa/room/25973.html

[thriftyandboringinohio]

Very cool Belvegas. Does an apartment like that require expensive annual fees or taxes in Japan?

[Milton Kuo]

Very cool Belvegas. Does an apartment like that require expensive annual fees or taxes in Japan?

Per the listing, the monthly management fees are 44,700 yen or ~$500. There's a relatively whopping 700,000 yen one-time cost at time of purchase and yearly taxes of 146,500 yen. One-time registration and real estate acquisition fees add another 640,000 yen to the purchase price, which totals 1.8M yen. Interesting that the site can be viewed in one of four languages: Japanese, English, Chinese, and Korean, which gives some idea as to the potential pool of buyers.

This place seems quite inexpensive from an American perspective especially after a decade plus of housing bubble fun but it is kind of in the boonies. I wouldn't be surprised if the place were kind of like a ghost town when it's not ski season.

[touchring]

The kinds of people who use real estate as a store of wealth are often from places like China or Russia. When you look at their history of currency devaluations and government seizures of assets, losing 3% per year looks like a pretty good return. That's not even considering the fact that U.S. real estate is one of the best places in the world to launder large quantities of money and not run the risk of the money laundering agent absconding with your money. That's why housing is expensive in these types of transactions: these people need to move a lot of money and they don't want to have to buy hundreds or thousands of $100,000 homes. A $100M penthouse apartment in NYC fits the bill perfectly.

Sounds more like trophy real estate that you can boost to your friends in my opinion.

Buying a gold or silver mine with proven reserves is a better store of wealth.

[Belvegas]

perhaps it would be interesting to consider the role trends play in this. in contrast, in niseko (another ski town in northern japan) which is very trendy now and undergoing a lot of development, a new condo of 850 square feet goes for north of US $1,000,000

https://nisekorealestate.com/propert...-niseko-511-2/

the skiing in niseko is likely better but would also require a flight plus a train ride to reach.

also, just to note, cheap real estate in the japanese countryside is not at all unusual. many towns have implemented various programs/incentives to try and make use of existing/unused housing and attract young people to the countryside.

a number of years ago my wife and i spent a weekend in a tiny town roughly 3 hours drive from tokyo. there was only one restaurant and they obviously knew we weren’t from around there. at some point during the meal they tried to sell us on the idea of relocating there. there were financial offers to help us in renovating one of the neglected/idle properties with additional incentives down the road if we were to have children and enroll them in the local school.

i suppose the demographics make this situation unique to japan and less likely in the US.

[Milton Kuo]

perhaps it would be interesting to consider the role trends play in this. in contrast, in niseko (another ski town in northern japan) which is very trendy now and undergoing a lot of development, a new condo of 850 square feet goes for north of US $1,000,000

On the subject of trends, sure, Japan has an aging population, negative population growth, and a restrictive immigration policy. Excess real estate not near jobs or busy areas is going to sell for very deep discounts under those circumstances. To a foreigner, the ~$5,000 condo in the original article is really only suitable as a holiday getaway. A person looking to live there day-in and day-out must either be independently wealthy or have a job that allows him to work from home. While the cost of the house seems eye-poppingly low, someone accustomed to the U.S. must also consider what will likely be very high costs for things such as an automobile and the fuel to run it, utilities (especially if one is accustomed to air conditioning), and food. On the subject of food, if one does not want to eat Japanese food all the time, being in the boonies could make it difficult and/or even more expensive to acquire certain food ingredients not commonly used in Japanese cooking.

It should also be noted that the $5,000 place is about 80 miles from the Fukushima nuclear plant disaster. Maybe that, too, has a bearing on the price.

the skiing in niseko is likely better but would also require a flight plus a train ride to reach.

also, just to note, cheap real estate in the japanese countryside is not at all unusual. many towns have implemented various programs/incentives to try and make use of existing/unused housing and attract young people to the countryside.

Niseko is also a few hundred miles away from Fukushima so that can't hurt the price. There was a Bloomberg article a year or two ago about the empty houses in Japan or the towns with only old people in them. It remains to be seen how Japan addresses this problem. I'm not entirely sure Japan is a country that would be willing to accept a lot of non-ethnic Japanese people into the country. Also, there really isn't anything wrong with a drop in population so long as it doesn't become a spiral into extinction. The need for neverending growth is part of junk economics.

[LargoWinch]

One year on and it should be crystal clear that this "relaunch" was never about iTulip. iTulip has been a stunning disaster; hopefully it is gone for good.

[Polish_Silver]

One year on and it should be crystal clear that this "relaunch" was never about iTulip. iTulip has been a stunning disaster; hopefully it is gone for good.

Has EJ posted recently ? I really valued some of his analysis during the stock and housing bubbles.

Gold price predictions post 2011 not very accurate. How do you forecast market sentiment.

Now that Dalio is talking about gold, it's about time for the next gold Bull.