San Jose homeowners can now sell their accessory dwelling units as separate property.
Last week the city became the first in the state to opt into a new law that allows ADUs and the land underneath them to be sold as their own lot.
ADUs have been targeted as one way to ease the housing crisis in California by lawmakers in a series of laws that made changes such as easing construction and conversion requirements and speeding up the permit process. The latest law, AB 1033, allows homeowners to split their lot and sell an ADU as a condo if local jurisdictions opt in.
Assemblymember Phil Ting, D-San Francisco, who authored the law, said it will also allow property owners to get value out of property without taking out a loan.
“This is one way to get equity out of your home without going into debt,” Ting said in a phone interview on Friday.
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Ting spoke earlier in the day at a press conference at a San Jose home along with San Jose Mayor Matt Mahan celebrating the city ordinance that took effect on Thursday.
“We are eager to create a generation not just of renters, but of homeowners,” Mahan said.
The city has built nearly 1,400 new ADUs in the last five years, representing about a quarter of its housing stock in that time, and thousands more have been permitted, according to Mahan.
Both Mahan and Ting said they hoped other jurisdictions would follow suit. So did housing advocate Rafael Perez, board president of the nonprofit organization Casita Coalition, who also spoke at the press conference.
“ADU condos have proven successful elsewhere, providing much-needed inventory that is more affordable than traditional single-family homes,” Perez said.
“Families in San Jose will now have more options for housing themselves and other generations on properties with an ADU,” he said.
The move also drew support from the Santa Clara County Association of Realtors. The Association’s president, Michelle Perry, said in a statement that ADUs have been a successful way to create new affordable housing.
“AB 1033 permits cities the opportunity to approve the conversion of ADUs to for sale housing offering a viable pathway to homeownership,” Perry said.
Dan Kearnan, who hosted Friday’s conference, said the changes in state and local law had allowed him to take advantage of the property he moved into in 2018.
“I looked out at our backyard, which had not been developed, and said, ‘what can I do with this large property?’”
He said he installed the ADU in 2021 and had been renting it out. Now, his in-laws will be moving in, for better or worse, he joked, allowing them to become homeowners in Silicon Valley after being priced out of the market.
The average price of a UK home was 1.5 per cent higher than a year ago, according to an index from Britain’s biggest mortgage provider.
The typical property now costs £288,688, a slight fall on the £288,862 recorded in April this year.
From month to month, house prices stayed relatively stable, Halifax’s house price index (HPI) showed, with the average UK house price falling by 0.1 per cent, or around £170 in cash terms, in May, compared to April.
There has been large regional variation, with prices rising 3.8 per cent in the past year in the north-west of England, but falling 0.8 per cent in the East of England.
Amanda Bryden, head of mortgages, Halifax, said: “Market activity remained resilient throughout the spring months, supported by strong nominal wage growth and some evidence of an improvement in confidence about the economic outlook.
“A period of relative stability in both house prices and interest rates should give a degree of confidence to both buyers and sellers.
“While home buyers and those remortgaging will continue to respond to changes in borrowing costs, set against a backdrop of a limited supply of available properties, the market is unlikely to see huge fluctuations in the near term.”
Some experts suggested people may be waiting to see what happens in the election before deciding to buy or sell.
Nathan Emerson, chief executive at property professionals’ body Propertymark, said: “With a general election now on the horizon, there may be potential caution from buyers and sellers, especially those hoping to step onto the housing ladder for the first time.”
Interest rates – which have a large bearing on mortgage costs – have remained on hold at 5.25 per cent since last summer.
In 2023 there was an expectation they could fall by now, which would probably have led to lower mortgage rates and boosted housing affordability, but this has not materialised.
Higher mortgage rates generally limit the capacity for significant house price rises because they quash affordability of higher borrowing.
Verona Frankish, chief executive of online estate agent Yopa, said that when a Bank of England base rate cut “does materialise, we expect the current rate of house price growth to accelerate”.
Those looking to buy or remortgage their property are advised to plan ahead.
Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, said: “Buyers should remember they can lock in a mortgage deal up to six months ahead of the start of their mortgage term, with the option to switch to a better rate should it come along in the meantime.”
Despite concerns house price growth is not improving as much as hoped, housebuilder Bellway said falling inflation and improving consumer confidence helped push its sales up this spring compared to 2023.
The firm said the net private reservation rate – the number of people putting their names down for a new home – at its active outlets had risen to 0.62 during the four months to 2 June, compared to 0.58 for the same period in 2023.
It said the higher demand was down to an “improvement in affordability, driven by a moderation of both mortgage interest rates and consumer price inflation and an increase in wages”, in a trading update.
Jason Honeyman, Bellway chief executive, said: “Bellway has delivered a solid trading performance supported by improved affordability and a seasonal uplift through the spring, and we remain on track to deliver full year volume output of around 7,500 homes.
“We have been encouraged by ongoing healthy levels of customer interest and combined with the strength of our outlet opening programme, we continue to expect a year-on-year increase in the forward order book at 31 July, 2024.”
House prices fell in April, second month in a row, as potential buyers continued to face pressure on affordability, according to the Nationwide.
The UK’s biggest building society said that UK house prices were down by 0.4% compared with the previous month. It said the average home cost £261,962, some 4% below the peak in the summer of 2022. The rising cost of borrowing was key to the latest fall in prices. The figures come after a string of lenders raised rates on new fixed-rate mortgage deals in recent days.
The increases were prompted by expectations of fewer and slower interest rate cuts by the Bank of England. The Halifax is the latest lender to announce higher rates, with a plan to put up the cost of much of its mortgage range by 0.2 percentage points.
The interest rate on a fixed mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it. Doing nothing would leave people on a variable rate, which is very expensive. About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.
This is the second consecutive monthly fall in UK house prices, according to Nationwide’s data. Every area has its own factors affecting house prices, so property values would have changed at varying rates in different parts of the country. The figures are based on the building society’s own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales. On an annual basis, the pace of house price growth slowed from 1.6% in March to 0.6% in April.
The Nationwide said that potential first-time buyers were being put off their plans to purchase a property owing to high house prices and the high cost of borrowing. Its survey suggested that about half of those considering buying a first home in the five years, had delayed their plans over the last year.
Demand for smaller homes such as flats had been increasing at a faster rate than bigger properties, owing to the squeeze on affordability. It said there had been a switch in demand, reversing the “race for space” that was seen during the Covid pandemic when buyers searched for bigger homes.
- In Japan, homes where a death has occurred carry a stigma that can make the home hard to sell.
- But some agents are making a career out of getting these “stigmatized” properties off the market.
- One expert estimates that some of these houses can have their prices reduced by as much as 50%.
The first time Koji Hanahara stepped into one of Japan’s “stigmatized properties,” it was the scene of a lonely death. An elderly man had died alone in his apartment, and his body was only discovered two months later.
It was unnerving, but it reminded Hanahara of why he chose to do what he did. As the CEO of Marks Co., a Japanese real-estate company that specializes in cleaning, renovating, and selling stigmatized properties, it’s his job to get these houses back onto the market again — despite their history.
“I thought I should be the one to do it. At that time, I realized again that it is my mission to help as many people as possible,” Hanahara told Insider.
Building a business around ‘accident properties’ that are hard to sell
The term “jiko bukken” — which translates to “stigmatized property” or “accident property” — is most commonly used to describe a property where a suicide, murder, or natural death has occurred.
“In Japan, it is said that there are about 30,000 lonely deaths at home, about 13,000 suicides a year, and about 2,000 homicides and fire deaths a year, making it a total of 45,000,” Hanahara said. “Not all these properties are rented or sold, but the current situation is that there are a large number of accident properties.”
Not only can these houses be hard to clean, but the stigma makes them almost impossible to sell.
“In Japan, many people have the impression that accident properties are ‘scary,’ ‘ghostly,’ and ‘dirty,’ which makes them exclude accident properties when choosing real estate,” Hanahara said.
While most real-estate agents want to avoid sharing grisly details, Hanahara does quite the opposite.
Marks Co.
After working at a construction company for residential homes, Hanahara started his own real-estate agency, Marks Co., in 2016. He pivoted to specializing in stigmatized properties in 2019.
The listing information on his company’s site, Jobutsu Real Estate, includes a room description and details of how and when the previous owner died. “Suicide in December 2018” reads one listing currently available for 26.8 million yen, or $194,857. “The former owner died indoors in 2014” reads another that’s on the market for 21.8 million yen.
Cheaper to rent or buy
Despite the stigma that’s attached to these houses, there’s a big plus point for buyers and renters: price.
Hanahara estimates that properties where lonely deaths have occurred tend to have prices reduced by 5 to 10%, while houses where suicides have occurred tend to have prices reduced by 20 to 30%. The prices of houses where murders have occurred can be reduced by as much as 50%, he added.
On the Jobutsu site, a 29-square-meter stigmatized condo apartment in Shinagawa-ku, Tokyo, costs 21.8 million yen. A non-stigmatized condo of the same size in the same location costs 27.6 million yen, per data from the Japanese real-estate platform Utinokati.
Google Maps
For some young families, the cheap rent is attractive. Kasia Pawlus-Ono, a Polish stay-at-home mom, moved to Japan from Australia with her Japanese husband and their daughter in 2019.
They lived in a stigmatized property in Hanamigawa, in the Chiba prefecture, from March 2019 to May 2021. The former tenant was a young mother who had died in the house, Pawlus-Ono said.
Kasia Pawlus-Ono
“It was around 25,000 yen when it was half-priced,” Pawlus-Ono told Insider. “We paid one year of the rent basically up forward, because it was half price from the original because of the stigmatized property status.”
In contrast, the average monthly rent for an apartment in Hanamigawa is 56,084 yen, per Utinokati.
“I would say it was a positive experience because our neighbors were fine. It also seemed like they were quite happy that someone moved in because for them it was strange that it was empty for so long,” Pawlus-Ono said. She added that her rent went back its regular price — about 50,000 yen — after a year.
Rent may recover over time, but it doesn’t mean agents no longer have to notify future tenants about the incident. Japan’s Building Lots and Buildings Transaction Business Law prohibits realtors from intentionally withholding facts about the properties they’re selling, Hanahara said. And in October, new guidelines from the Ministry of Land, Infrastructure, Transport and Tourism specified that brokers must disclose deaths if they had been well-known incidents, involved foul play, or have a significant decision-making impact. Realtors must also disclose all past deaths, regardless of their nature, if tenants ask.
Scott Rothman
Scott Rothman, a technical director from the United States, moved into a stigmatized studio apartment in Shibuya, Tokyo, in September 2017. He lived there for slightly over three years.
“I got I think two free months of rent and the rent was quite discounted,” Rothman told Insider. “The value was way better than I ever could have actually afforded and I even got a couple of free appliances out of it.”
The previous tenant was an older woman who had died of natural causes in the house, Rothman said: “I was weighing the pros and cons of the apartment when I thought, ‘People have to die somewhere? What’s the difference?'”
How to find stigmatized properties in Japan
People can also find stigmatized properties in Japan on a website called Oshimaland.
The site maps stigmatized properties and provides the details and date of the incident that occurred there. However, it’s not an official record; anyone can submit entries to the site, website creator Teru Oshima told Insider.
“Landlords have an incentive to check the website since everything that’s written on it has a negative impact on the prices of their assets,” Oshima said. “They can send me emails, post comments, send direct messages through Twitter or Facebook or any other route to contact me to correct the information if it’s not true.”
Oshimaland
Marks Co. receives about two to three notifications about potential property listings in a day, most of which come directly from the relatives of the deceased. The company also works with funeral houses and special cleaning companies to look for more properties, Hanahara said.
In terms of tenants, he’s noticed a trend of people in their 20s and 30s, single mothers, and single women living in stigmatized houses. And while the discounted pricing is one reason these apartments can be appealing — Tokyo, for example, is the fourth-most expensive city in the world to purchase property — it’s not only about money.
“When you think of living in an accident property, you may have the idea that you are choosing the accident property because you have no money,” Hanahara said. But the property might have other appealing perks, such as being located near public transport or in a new building, he added.
Some real-estate agents have reservations about dealing with stigmatized properties.
“I know there is certain demand, but it’s really risky,” Yuki Yanagita, a sales representative from real-estate company J&F Plaza, told Insider. J&F Plaza specializes in helping foreigners find property in Japan.
Along with a smaller pool of buyers, the cost of deep cleaning the house is borne by the agency — something not every company is willing to take on, Yanagita said. People in Japan often also closely associate stigmatized properties with the paranormal, he added.
But as for Hanahara, his goal is step in and handle exactly the stage of the process that others stay away from.
“We will help those who are willing to sell their accident property right from the stage when the accident occurred,” Hanahara said.