Japan’s Houses of Horror
Homeowner Nagako Itoga lifted up a tatami mat to reveal a corner beam of her $250,000 house almost completely detached from the foundation. Then she pointed out the unsound roof supports, tilting hallways and floorboards so rotten the ground is visible below.
“I’m so angry with this atrocious construction I considered lighting myself on fire with kerosene in front of the government building,” she said. “But my daughter pointed out that it would be far better to stay alive and fight those responsible for this mess.”
In any country, the family house is the bedrock of emotional and financial security, but it has turned into an albatross for many here. It’s bad enough that deflation has eaten at land values over the last decade. Now, many thousands are finding that government policies and construction industry practices leave their houses worthless in as little as 15 years.
The wake-up call was the magnitude 7.2 earthquake that slammed into Kobe in early 1995, killing 6,400 people. As workers cleared the rubble left by about 440,000 collapsed buildings, it soon became apparent that many new houses built by name-brand Japanese developers had collapsed while older houses, including many using foreign construction materials and methods, stood firm.
In 1996, the Japan Consumer Information Center received more than 3,400 housing-quality complaints, a doubling of pre-earthquake levels, and the phones haven’t stopped ringing. Tokyo last April opened a dedicated housing court where more than 300 cases are pending.
“This is a country where well-made Japanese buildings made by master craftsmen are still standing 1,300 years later,” said Gaku Itoh, director of Gaku Architectural Institute, a consumer watchdog group. “But developers are only interested in cutting costs and driving up profit so quality’s gotten worse and worse.” And the Construction Ministry, he added, is in league with the builders.
Regulations and industry practices encourage homeownership, but they also channel buyers to new homes rather than pre-owned ones. New-house buyers get mortgage deductions and other tax breaks not available to second or third owners. Only 11% of home sales in Japan are for pre-owned houses, compared with 76% in the United States.
Once houses start to fall apart, generally within a couple of decades, they’re essentially thrown away. In some cases, the mortgage outlasts the house. The average life of a Japanese house is 26 years, compared with 44 years in the U.S. And aggressive government-backed lending policies for new homes--as low as 2.75% for the first 10 years of a 35-year term--make it easy for buyers to get in over their heads.
Feeling Like ‘Prisoners With No Escape’
In the U.S., buyers can hand the keys to the bank if the value plummets. Borrowers in Japan don’t have that option; they are personally liable for the full amount.
Homemaker Yumiko Uchida, 41, living in a defective house in Itoga’s neighborhood near Tokyo’s Narita Airport, lays a golf ball on her floor that quickly picks up speed on the 2.8% slope before slamming into the opposing wall. Upstairs, a plumb line hanging from the top of the doorway is two inches askew by the time it reaches the floor.
The Uchidas paid $280,000 for their house in 1992 and owe $146,000 on the mortgage. “It’s now worth maybe $38,000 if anyone would even buy it,” said the mother of two. The trauma over their failed investment has left her husband, who commutes four hours a day, physically and mentally weak. “He spends his weekends in the hospital,” she said. “We feel like prisoners here with no escape.”
Often, as houses approach their 20th birthday they’re worth less than zero given the $10,000 cost of breaking down and carting away structures nobody wants.
“It’s been a continuous cycle of scrap and build,” said Fumio Shinohara, senior researcher with NLI Research Institute, a think tank.
Consumers who complain about sagging walls and faulty construction soon hit a wall. Consumer complaints are frequently channeled into an industry-government committee. The construction industry is a huge national employer, a major political fund-raiser and often hires Construction Ministry bureaucrats after retirement. As if that didn’t stack the deck, consumer groups say the industry has traditionally had a major role in writing the regulations governing its practices.
Once consumers lodge their complaint with the committee, they give up their right to sue, further undermining their leverage. The Construction Ministry, meanwhile, doesn’t disclose to prospective buyers which developers are the subjects of frequent buyer complaints on the grounds that this would undermine the company’s privacy rights.
“Individuals may need privacy, but huge companies don’t. That’s ridiculous,” said Mitsuru Toyoda, owner of a condominium near Yokohama who is involved in a lawsuit with developer Mitsui Real Estate Co. “It’s like an ant trying to fight against an elephant.”
Those such as Toyoda and wife Hitomi who take their grievances to court find themselves in expensive, time-consuming fights that leave the burden of proof on the consumer.
Under Japan’s civil law, consumers have only five years to sue, even though structural flaws may not show up for a long time. There’s no discovery process, which allows both sides to gain access to key facts, leaving consumers to fight against corporations with their armies of engineers, technical details and expert mumbo jumbo.
Construction Ministry officials and developers concede there are systemic shortcomings but deny any special relationship with each other. They point to recent improvements, including a quality assurance law enacted in 2000 and a new inspection system. There are few penalties on developers for noncompliance.
“In Japan, not just in the housing industry, there’s been a tendency to support the companies, not the consumers, and to focus on quantity over quality,” said Shin Honto, secretariat head of the Land, Infrastructure and Transport Ministry’s dispute committee.
“There wasn’t really any mechanism to hear or reflect consumer voices. It’s not a good system, so we’re trying to change it.”
Add these factors up, said Keio University professor Haruo Shimada, an economic advisor to Prime Minister Junichiro Koizumi, and you have a huge reason Japanese aren’t spending and don’t feel confident about their future.
“People are really scared about being unable to sell their houses,” he said. “They’re afraid of losing their entire fortunes. It’s a disaster.”
Even those with well-built homes face a tough time reselling. Sale prices aren’t public, there’s no multiple listing service, no tradition of independent inspections and no public tax records, making it difficult to gauge the market.
Although exact comparisons are difficult given the difference in land prices, Tokyo residents pay more than twice what their Los Angeles counterparts do for a house that’s 25% smaller. The gap for condo purchases is even greater. The average city dweller has a $760,000 mortgage outstanding on a property worth half that.
Rigid rules lock people in, preventing the growing elderly population, for instance, from moving into smaller units closer to hospitals and public transportation.
Those who complain face a tough road. The Toyodas bought their top-of-the-line condominium from Mitsui for $1 million in 1990. Within months, the balcony on the unit advertised as a “home for life” started separating from the exterior wall, the ceiling and windows were leaking, huge concrete chunks had fallen from the ceiling, and wind was blowing through the walls.
The Toyodas say Mitsui initially tried to ignore them, then attempted a cover-up and finally turned their neighbors against them by accusing them of being “troublemakers” in a nation where group harmony is paramount. When the problems became too obvious to ignore, Mitsui offered to have its subsidiary do a quick patch job the Toyodas say was designed to destroy the evidence.
“They keep changing their story like a chameleon, trying to wear us down financially and emotionally,” said Hitomi Toyoda. “This was supposed to be our dream house. Instead, it’s turned into the biggest mistake of our lives.”
Mitsui officials say they understand the Toyodas’ frustration at not getting much initial response to their complaints. But they maintain that the separating balcony and other problems aren’t structural.
“We’re not denying all responsibility,” said Jun Kanai, Mitsui’s deputy communication manager. “But this is not the end of the world. We’re working to improve our efficiency.”
Itoga, meanwhile, said she realized almost immediately after buying her house and a second $184,000 building for her home-based business that there were major problems. Her first clue was when her bank balked at the loan, forcing her to borrow from relatives. Only later did she realize the bank had seen the construction documents and run in the opposite direction.
Within days of her 1995 closing, problems surfaced. It soon became apparent her two houses along with the Uchidas’ and those of most others in the subdivision were shifting and sagging after being built on a soggy rice field. Despite claims that the houses used renown cedar from the Akita region, they’d been slapped together by unskilled laborers using cheap ply board covered with a plastic veneer.
Septic tanks started tipping over, gas pipes exploded, front doors no longer opened, and foundations sank. Resident Minoru Isaka, a retiree, uses a window-washer’s belt to go out on his shifting balcony. An expert hired to inspect houses in the complex determined that 40% were dangerous, 30% seriously defective and 20% had significant problems. Just as the residents in 1997 started realizing how bad things were, the quasi-government Akita-based developer declared bankruptcy.
Most People Prefer to Suffer in Silence
But most people are afraid to speak out in a nation where people are taught to endure and avoid confrontation. Only 17 of the 256 homeowners in the subdivision have joined the Itoga-initiated lawsuit against the Akita government, the project auditors, and its bankers and individual executives. The rest prefer to suffer in silence, viewing their more defiant neighbors as troublemakers.
After she filed the suit, Itoga’s children were bullied in school.
“They taunt them about the defective house, as though it were something about their own character,” she said.
The struggle for justice has become an obsession for Itoga. Her house is a museum of defects replete with ripped-out flooring and ceilings cut open to reveal twisted or missing beams. Many of her walls are painted with arrows to highlight adjoining defects. Her back hurts from walking on the sloped floors, and she complains of the oily smell emanating from the earth below.
Itoga’s second building was supposed to spur the efficiency of her home-grown plastic parts business, but it’s had the opposite effect. Business is down because she’s stressed and more clients are rejecting orders contaminated by dust falling from the ceiling. She advises her four employees to get out at the first hint of an earthquake. “Even a thunderstorm or a passing car makes it shake,” she said.
“I’ve lost 38 pounds from all the anxiety, and I’ve thrown up blood,” she said, tears streaming down her face. “I feel betrayed. There are no words to describe such frustration and pain.”
Hisako Ueno in The Times’ Tokyo bureau contributed to this report.
