Originally Posted by
JamesBigglesworth
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.