Rent-Level Home Purchase Trap in the 20s Leads to Overpriced Housing Risks and Double Burden of Mortgages and Education Costs
Amid continued rises in housing prices, a government household survey by the Ministry of Internal Affairs and Communications shows that the homeownership rate among people in their 20s (two-or-more-person households) has reached a record high.
Behind this trend are factors such as growing anxiety that “if I don’t buy now, I may never be able to afford a home,” the spread of dual-income pair loans, and the increasing use of ultra-long-term mortgages exceeding 35 years.
However, there is an inherent risk that if household income declines due to events such as childbirth, repayment can quickly become difficult. The idea that a home can be purchased for less than rent, or that it can simply be sold to repay the loan, does not always work out in reality.
The risks of overextending to buy a home are not limited to people in their 20s. Scenarios such as divorce after buying a home with a pair loan, household finances collapsing when peak education costs overlap with mortgage repayments, and post-retirement financial ruin due to continuing mortgage payments are all possible. Beyond the dream of homeownership, a scenario of despair may be waiting.
Reasons why young people are rushing to buy at high prices
The reasons young people are rushing to buy homes at high prices can be divided into three main factors: anxiety about rising prices, expectations of further price increases, and systems that make it possible to buy even expensive homes.
◇ Anxiety about missing the chance to buy
According to the Real Estate Economic Institute, the average price of newly built condominiums in the Tokyo metropolitan area (Tokyo, Kanagawa, Saitama, Chiba) in fiscal 2025 reached 93.83 million yen, a record high.
Rising construction material costs and labor expenses, combined with investment demand mainly from foreign investors, have continued to push housing prices upward. This situation creates a sense of urgency among buyers: “If I don’t buy now, I may never be able to afford a home.”
◇ Expectations that prices will continue to rise
Rising housing prices also create the expectation that property values will continue to increase after purchase, along with the reassurance that the home can be sold if necessary.
If prices are expected to keep rising, buying earlier appears more “profitable.” This expectation and sense of security can justify purchasing a home even under financial strain.
◇ Systems that allow people to buy even expensive homes
The spread of pair loans, joint and several liability loans, and ultra-long-term mortgages also supports home purchases.
With dual-income households becoming the norm, the use of pair loans and joint debt is increasing. These allow couples to borrow based on combined income, enabling them to take out larger loans than a single borrower could.
Recently, some financial institutions have begun offering “ultra-long mortgages” with repayment periods of up to 50 years. Longer repayment terms increase borrowing capacity and reduce monthly payments (although interest payments increase, leading to a higher total repayment amount).
You have managed to acquire a home of your own. However, a harsh reality may lie ahead.
How childbirth and career breaks disrupt pair loans
In cases where a home is purchased using pair loans or joint and several liability loans based on the combined income of a married couple, there are frequent situations in which repayment becomes difficult due to a reduction in household income caused by retirement, leave of absence, or job changes by either partner.
This risk is especially significant for couples in their 20s and 30s. After childbirth, it is common for wives to take extended leave or resign from work for childcare. Even if they plan to return to work soon after giving birth, various factors—such as the inability to secure a nursery place, slow physical recovery, or the need to care for a child with illness or disability—can prolong their absence. In some cases, this leads to permanent resignation.
Once a long-term career break occurs, even if the person returns to work, their income often decreases, and the original repayment plan can be significantly disrupted.
If repayment becomes difficult due to a decline in income, borrowers may be able to receive relief measures such as repayment deferrals or reductions, after undergoing screening by the financial institution that provided the loan.
However, these are only ways to temporarily reduce the burden by postponing repayment. Repayment is not forgiven, and the final burden will increase. If the relief measures are not granted and repayment falls into arrears, the financial institution will demand a lump-sum repayment, and in some cases, if the repayment cannot be made, the couple may be forced to give up the house.
The tragic end of pair-mortgage divorce
It is said that in an era where one in three couples divorces, various problems arise when a home has been purchased before divorce. In particular, cases involving pair loans or joint and several liability loans tend to become especially complicated.
In general, mortgage contracts cannot be changed mid-repayment, meaning that even after divorce, repayment obligations continue until the loan is fully paid off. The simplest solution is to sell the home and repay the loan in full. However, if the loan balance exceeds the home’s appraised value (i.e., a situation known as negative equity), selling the property will not be enough to fully repay the debt. The longer the repayment period, the slower the principal is reduced, increasing the risk of negative equity.
If selling the home is difficult, or if there is a desire to avoid changing a child’s living environment, one option is for one party to remain in the home while continuing to repay the loan. In this case, the party who moves out may still be required to continue paying their share of the mortgage. Combined with paying rent for their own residence, this creates a “double burden” that can be extremely financially difficult.
Pair loans also require caution because each borrower acts as a joint guarantor for the other. If one party falls behind on payments, the other becomes responsible for the full repayment. While it is sometimes possible to dissolve a pair loan through refinancing or consolidating loans, in many cases the remaining borrower’s income alone is not sufficient to pass the screening process, especially when the outstanding loan balance is large.
Education expenses and loans double burden of hell
In households with children, finances often become strained when the child reaches university age.
Education costs up through high school are generally amounts that can be managed from monthly household budgets as they arise. However, at university level, tuition alone can range from hundreds of thousands to several million yen per year. In addition, there are often extra expenses such as living allowances if the student lives away from home, or commuting costs if they stay at home. These expenses typically continue until graduation. When combined with ongoing mortgage repayments, household finances can become very tight.
Funds for university education involve large sums and are required at a clearly defined time. Ideally, they should therefore be planned and prepared well in advance of university admission. However, in reality, mortgage payments arrive every month without fail. When the burden of the loan is heavy and there is little financial flexibility, saving for future expenses that are not immediately necessary tends to be postponed. Before families realize it, children grow up quickly while savings have not been accumulated.
Ways to cover shortfalls in university funding include scholarships and education loans. However, these are essentially forms of debt. Using them means leaving financial obligations for either the child or the parents in the future. While ensuring the child’s desired educational path is a priority, such options must be considered carefully and used with proper planning.
In practice, the amount of education expenses varies greatly depending on the child’s chosen path and educational philosophy. Costs can increase significantly due to cram schools or extracurricular activities, and if the timing of university admissions overlaps among siblings, families may face situations where they run short of funds even before university enrollment.
50-year loan leads to retirement bankruptcy
Ultra-long-term mortgages can become a factor that threatens life in retirement. For example, if a person takes out a 50-year mortgage at age 30, the repayment can continue until age 80 unless early repayment is made. Although it is becoming more common for people to work into their 60s and beyond, income often decreases in post-retirement reemployment or rehiring. There are also cases where people are unable to work even if they want to due to health issues or the need to care for elderly parents.
It is also dangerous to rely too heavily on retirement benefits, pensions, and savings.
Many people plan to use retirement allowances to make early repayments on their mortgages. However, if the loan cannot be fully repaid, continued payments afterward can place significant pressure on retirement living expenses. In recent years, “defined contribution pension plans” have become more common, in which the retirement payout varies depending on investment performance. As a result, the final amount is not fixed until retirement (or payout), and poor investment results can derail financial plans.
In addition, retirement plans that assume gradual withdrawal from savings carry the risk of longevity risk, where living longer than expected leads to depletion of funds.
To avoid this risk, the key is to keep daily expenses within the range of stable income such as pensions. Savings should ideally be preserved and used mainly for irregular or unexpected expenses such as medical costs, long-term care, travel, and hobbies.
If mortgage repayments continue into retirement, monthly expenses remain high, making this balance difficult to maintain. If savings are depleted too quickly, a situation of financial collapse in old age can occur. If there was little room to prepare retirement funds due to ongoing loan repayments, there is no margin for recovery.
The trap of you can buy a home for the same amount as rent
We often see advertisements that say things like you can own a home for the same monthly cost as your rent.
It is true that if you continue paying rent for a home that never becomes your own, buying a house earlier can be seen as a rational choice. However, there is also a trap in this thinking. When you buy a home, there are additional costs beyond loan repayments that come with ownership. It is dangerous to make the decision to buy a home by comparing only your current rent with your mortgage repayment amount alone.
Depending on the property price, in many cases, the cost will increase by several hundred thousand yen to one million yen per year compared to renting. If a variable-rate mortgage is used, there is also the risk that loan repayments will increase due to rising interest rates.
If a home is purchased without taking these costs into account, the possibility increases that income and expenditures will be worse than anticipated and repayment will come to a standstill. It is important to make a financial plan with a margin of safety in anticipation of future increases in fire insurance premiums and reserve funds for repairs.
The end of the real estate bubble. Fear of not being able to sell
“Just sell the house if things go wrong and repay the loan.”
“If it gets too small, you can always upgrade later.”
Buying a home based on the assumption that you can sell it is a strategy that can work well in periods of rising housing prices. Over the past decade, this has often been a successful approach. In fact, in central urban areas, there are not rare cases where the appraisal value of a condominium has more than doubled in 10 years compared to the original purchase price. However, if that assumption breaks down, it can lead to a situation where the property cannot be sold at all.
Due to rising construction material and labor costs, as well as investment demand, new housing prices are likely to remain high for the time being. On the other hand, in the used housing market, the gap between listing prices and actual transaction prices is widening, and in some areas, price declines have already begun.
Going forward, the working-age population—the main group of homebuyers—is expected to decline, while inherited properties from the baby boomer generation will increase the supply of used homes and land. If buyers decrease while supply increases, housing prices may fall, especially for used homes and detached houses that are less attractive as investment assets.
In such an environment, taking on large, long-term mortgages based on expectations of price appreciation or easy resale carries significant risk. When purchasing a home in the future, it will become increasingly important to choose a property that fits one’s income and long-term life plan, with the assumption that one will continue living there.
Buying a home itself is not a bad decision. However, rushing into a purchase simply because others are doing so should be avoided.
A home that is meant to improve one’s life can instead become a financial burden, forcing people to live under constant stress. It is essential to carefully consider the balance between current living expenses, future education costs, and retirement savings, as well as the costs and risks of home ownership. Decisions about whether to buy, and how much to borrow, should be made carefully after proper financial simulations. If in doubt, it is important to pause and reconsider.
Interview and text： Hiroki Takekuni
Financial planner and representative of Rapport Consulting Office. After graduating from Nagoya University's Faculty of Engineering, he worked for a securities company and an insurance agency before setting up his own business. He is a first-class financial planning technician, CFP®, certified real estate transaction specialist, and sauna and spa professional.