Article published on Vacant House Lab | Roopt (Makigumi)
Makigumi, the company that operates Roopt, is constantly researching case studies and other information on revitalizing vacant houses and publishing them as columns.
Modern society is undergoing a significant shift in traditional values regarding real estate due to demographic changes and diversifying lifestyles. Especially in rural areas, where population decline is progressing, the demand for new properties and their yields are no longer as promising as before. The rapid decline in the young population and the rise of lifestyles other than nuclear families are also major factors in changing the criteria for real estate valuation.
As divorce becomes more common, and couples who start living together are increasingly unable to adapt to the changes that follow, the burden of mortgage payments is becoming a growing problem. These societal changes are leading to a reassessment of excessive trust in newly built properties and a growing appreciation for existing properties and properties that cannot be rebuilt.
The trend of accepting "living in a used property for 20 years" as offering the same level of security as a new property indicates a new lifestyle-based standard for evaluating real estate. This approach aims to evaluate properties using a more neutral standard, rather than judging them based on whether they are new or not, or whether the buyer is a salaried employee.
The valuation of a property differs between buying and renting. Generally speaking, renting an older property offers a higher perceived value than buying it. This is because the utility value of a property in the rental market is assessed more flexibly than in the purchase market.
Until now, it was common to arrange full loans for newly built properties or for borrowers with good credit, but there is a growing need to properly evaluate the actual utility value of properties with a 10-year or 50-year term. Regardless of the age of a property, it is important to determine its utility value and evaluate it appropriately. It is time to include renovation costs in this evaluation and determine the true value that a property possesses.
Demographic shifts and diversifying lifestyles are significantly changing the criteria for real estate valuation. Beyond preconceived notions about new construction, there is a need to recognize value in existing properties and those that cannot be rebuilt. Whether buying, selling, or renting, a flat valuation based on actual use value will become the new standard in the real estate market going forward.
source: Vacant House Lab
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