Posted on 10/17/2010 4:40:35 PM PDT by SeekAndFind
apan has often been portrayed in US media as a futuristic society: you know, robots and the like.
But more and more, the story has been about the Japanese economy looking like what we'll look like in 10 years -- a land of endless cheap money, sub-1% rates on 10-year bonds, and a three-decade slump in stocks.
The New York Times has a very worthwhile piece on the state of Japan, focusing on its economy, and its effect on the national psyche.
It starts with a terrifying little anecdote:
Like many members of Japan’s middle class, Masato Y. enjoyed a level of affluence two decades ago that was the envy of the world. Masato, a small-business owner, bought a $500,000 condominium, vacationed in Hawaii and drove a late-model Mercedes.
But his living standards slowly crumbled along with Japan’s overall economy. First, he was forced to reduce trips abroad and then eliminate them. Then he traded the Mercedes for a cheaper domestic model. Last year, he sold his condo — for a third of what he paid for it, and for less than what he still owed on the mortgage he took out 17 years ago.
17 years later selling your home at a 66% discount? It's not even that bad yet in Las Vegas!
(Excerpt) Read more at businessinsider.com ...
Conversely, if the market price of his condo was triple what he originally paid for it, chances are, he'd be paying quite a bit of money for his new residence.
Now for people who see their primary residence as an "investment" - well that's another matter. When purchasing a primary residence, it is wise not to look at it as an investment. Get a home you are comfortable staying in at a price you can afford.
Here’s another perspective on Japan’s Lost Decade...
http://www.theatlantic.com/magazine/archive/2010/09/japan-surrenders/8183/
TITLE: JAPAN SURRENDERS : The author returns to his old Tokyo neighborhood and finds an inward-looking country that has lost its ambition.
zowie.
Well?
I assume you would call that a used condo.
Can you get one third of your original price on a 17 year old Camry?
The realtor,bankers,builders perfect fraud that investments in dwellings can only go one way, TO THE MOON, always was baloney and everyone better get a clue.
The grotesque greed and lawlessness of the banking and financial industry has truley destroyed the notion of saving, i.e. Capitalism.
But of course I will be called a communist for stating the obvious.
I am seeing homes at about half the price they were 3 years ago: $1.2 million for $550, $878k for $450k, $850 for $405k, $775k for $380k. Those are real prices in the past 3 months that I have seen.
The problem is that he still owes a large amount on the first house.
No, Las Vegas is worse - 60% in only two years. I know from personal experience. :(
All because the government is trying to control the economy and prevent the pain of business failing and temporary high interest rates to discourage lending and encourage savings. I wonder how long before they figure out that Keynes didn't know what the hell he was talking about.
RE: I am seeing homes at about half the price they were 3 years ago:
What great state in the union do you live in?
The solution would really be to allow the price of houses to fall instead of trying to prop them up artificially.
Let the houses find their true price...
We have not really tried that at all.
Homes in my area are down as much as 50% of their artificially inflated prices (Bakersfield CA). I bought just before the boom and my value inflated 2x and is now down by about 40% of its high. I’m not wet, I didn’t take out a 2nd or refi.
Let’s hope your home appreciates in value 17 years later. :)
Denver, Colorado.
I’m not optimistic about the future of housing values. We have a current huge oversupply of homes built for all the people who got easy loans and are now having to leave them.
About the time we overcome this huge surplus, all the baby boomers will be leaving their homes to the market as they downsize, move into old folk homes or just die off.
All said, I’m gonna guess housing is gonn be pretty bleak for a good time to come.
We haven’t tried it since the mid 1990’s when interest rates started to fall.
That would require objectivity.
The other factor in Japan's inability to escape their deflation is demographics. They have a declining birth rate. They don't even reproduce to a static level, so they have fewer buyers at the front end of the chain of transactions.
Japan and Europe have a simple solution to an aging demographic, outlaw abortion and allow contraception only for women who do not have at least two children (or couples that may have genetic problems.
Japan and Europe have a simple solution to an aging demographic, outlaw abortion and allow contraception only for women who do not have at least two children (or couples that may have genetic problems.
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