Since low-perspective claims like this are scattered around, the 'Lehman Shock Uncle' is writing another article.
Bay Area Tower Mansion Pair Loans Will Not Collapse
The usual article: "A power couple with a household income of 15 million yen buys a 150 million yen tower mansion with a pair loan. When interest rates rise, their monthly payments increase by XX ten thousand yen! They can't cover it with salary alone! It's a collapse!"
Cynical Twitter users: "Yayyyyy!!!! Serves them right!!!!"
This is my recent X timeline.
Will what these articles claim actually happen? What kind of people are buying these properties? How much impact do rising interest rates have on them?
It's time to face reality, so let's look at the details.
The 'Sugoroku Group' Nouveau Riche
Freezing madness. There is a unique wealthy class there.
Here is some interesting data: the attribute data of early purchasers of the famous HARUMI FLAG.
Looking at it, the core demographic is in their 30s and 40s. More than half are company employees, while 27.5% are business owners or executives. Most interestingly, about 60% of buyers were 'upgraders' (buying a replacement home).
Even with this somewhat old data, we can see that people who suddenly buy expensive tower mansions from zero are actually a minority.
They bought a Toyosu condo for 60 million yen, which rose to 90 million yen.
They bought a Kachidoki tower mansion for 90 million yen, which rose to 140 million yen.
They sold it and bought the next one for 150 million yen.
It rose again, and now they're looking at 200 million yen.
Like moving forward on squares every time you roll the dice, they have expanded their assets by upgrading condos in central Tokyo.
This is the 'Sugoroku Group'.
They go to work normally, drop kids off at daycare, and pay their mortgages.
But behind the scenes, they hold hundreds of millions in assets.
This is actually the true identity of those buying Bay Area tower mansions.
Recent surveys of central Tokyo condo buyers confirm this trend.
In a 2023 survey of condo buyers in Tokyo's 9 central wards, many households held over 100 million yen in financial assets, and the difference between those who could buy and those who gave up was larger based on financial assets than on income. (*Japan Housing Research Center)
Exactly. One must say that people viewing things solely through the lens of 'household income' as a salary flow have a narrow perspective.
Mortgages as Leverage
Let's look at what these nouveau riche are actually doing.
For example:
A couple with 0 yen in assets buys a 50 million yen condo with a full mortgage.
That condo rises to 100 million yen in value.
They then buy an equivalent 100 million yen condo, sell their home, and pocket 100 million yen.
The change in their balance sheet looks like this:
By transitioning from ① to ②, they have obtained 50 million yen in cash.
They invest this cash, for example, in All-Country Funds (Orkan).
Simply put, what they did was borrow 100 million yen in mortgages to invest 50 million yen in stocks.
The answer to 'What did they do?' is leveraged investment using low-interest mortgages.
It's magic combining unrealized gains on homes and the mortgage system.
No stupid financial institution exists that lends money to individuals saying 'Lend me money because I'm investing in stocks!!'
However, using this system, they got loans for investment at interest rates below 1%.
And this leveraged investment was a huge success; even idiots can see that by looking at the rise of Orkan funds and real estate prices.
If the couple I mentioned earlier existed, they would likely have built assets worth hundreds of millions by now.
Yes. This Sugoroku Group already has assets worth hundreds of millions.
To them, household income figures don't matter.
Winners and the strong cannot possibly go bankrupt.
Rising Interest Rates for the Strong
The strong have options.
Let's look at the couple's example again.
Orkan funds doubled in the last 2-3 years.
Their 50 million yen cash is now a 100 million yen investment fund.
And they have a 100 million yen mortgage (assuming no repayment, which is impossible but illustrative).
Here, the option to 'repay the mortgage' arises.
What determines whether this couple exercises the option to pay off the mortgage in full?
It is the difference between interest rate and yield.
The difference between the mortgage interest rate on 100 million yen and the yield obtained by operating that 100 million yen. If the interest rate exceeds the yield, it's better to repay.
Consider the era when mortgage rates were 0.3%. Naturally, government bond yields were also near zero then.
So even if they could borrow cheaply with leverage, they had to take risks in stocks etc. to earn returns.
But the current situation (September 2026) is different.
The yield on individual government bonds (fixed 5-year) is 2.24%.
The lowest variable mortgage rate is 0.99%.
Considering taxes, there is still a plus margin of about 0.7% (plus generous benefits like mortgage deductions).
This rise in interest rates currently has almost no negative impact on most tower mansion power couples.
Rather, in the current situation, it can be called positive because 'you don't need to take risks'.
'If mortgage rates rise, isn't that negative?'
Yes, it is. But there is the option to repay.
Yes, they always have options.
And if these Sugoroku Group nouveau riche go bankrupt, it will only be if they make the wrong choice among these options.
The 'household income' figure everyone worries about is merely one aspect of the problem of 'monthly cash liquidity'.
For the strong who have options, rising interest rates are just material for deciding 'whether to repay debt or continue investing'.
Conversely, if they don't make the wrong choice, they won't go bankrupt.
Rising Interest Rates for the Weak
The strong have options. Conversely, the weak do not.
Prices rise.
Rent rises.
Interest rates rise.
There is no option to repay loans against continuously rising variable rates.
Under rising rates, borrowing capacity decreases, so there is no option to buy either.
There isn't even the option to leave cheap rent protected by the Land and House Lease Law and move to another rental.
They have no assets to invest.
Buying fixed 5-year bonds with 1 million yen yields 20,000 yen a year. It doesn't even cover pocket money.
On the other hand, if you have 200 million yen.
That's 4 million yen in annual income.
In the past, creating 4 million yen in cash flow from 200 million yen required taking risks.
In the 'World with Interest Rates', even that isn't necessary.
Recommended by banks or securities firms, without taking any risk, without studying anything, you get 4 million yen a year just sleeping at home.
The average annual income of hostess club workers is 4 million yen.
The average annual income of new university graduates is also 4 million yen.
Selling youth, manners, and health for 4 million a year.
Studying until university, commuting on packed trains, working 8 hours a day for 4 million a year.
Versus sleeping at home for 4 million a year.
I doubt cynical Twitter users laughing at tower mansion power couples have the luxury to feel superior in the 'World with Interest Rates'.
Choose Your Life
**
The victory of the 'Sugoroku Group' is also the result of choices.
"Idiots who buy condos in reclaimed land."
"Tokyo condos will crash after the Olympics."
"Mortgages are debt, owning a home is a liability."
"Bay Area tower mansions will crash due to oversupply."
These were loudly said between 2010 and 2020.
(Only the Bay Area oversupply theory had some merit. The rest were elementary school level opinions. The author also believed that theory and couldn't buy. However, demand actually absorbed the massive supply.)
Back then, there were hardly any people like today's 'condo salesmen pushing new builds (lol)'.
Those who, amidst uncertain discourse, took the risk of a mortgage and chose to buy Bay Area tower mansions turned their 'pawns' into 'promoted pawns'.
The probability of copying them now and becoming like them is not high.
If we knew which choice was correct, no one would struggle.
However, 'cynical Twitter users rejoicing over fictional stories of tower mansion power couple collapses' likely have few options left.
Tower mansions, pair loans, dual incomes, two kids, Miele dishwashers, drum dryers, mechanical parking, gym memberships, Sapix cram schools, junior high entrance exams, Orkan funds, individual government bonds, mortgage deductions, tax filings, tutoring, parks, LaLaport, sea breeze, ground stability.
Choose your life! Until the day you die.
