Americans collectively own nearly $35 trillion in housing wealth, an increase of nearly 80% since the start of 2020 (Federal Reserve). Yet, despite this unprecedented accumulation of home equity, many homeowners feel less financially secure than ever. A recent Hometap research found that almost half (54.5%) of homeowners report feeling financially stressed, with 46% citing rising housing costs as their biggest concern. This contradiction is at the heart of today’s housing market, where would-be buyers face sky-high entry costs and existing homeowners face both the high costs of staying in their homes and the frustration of having their wealth tied up in their properties.
Despite these challenges, homeownership offers compelling emotional and financial benefits that justify its importance in American life. As a result, we are faced with a crucial question: how can we preserve the dream of homeownership while adapting it to today’s economic complexities? The answer may lie in alternative financing options.
The paradox of modern home ownership
Homeownership has never been more intimidating, with obstacles at every stage of the life cycle.
The barriers are particularly high for starters. House prices increased by 47% between February 2020 and February 2025 (The Wall Street Journal), caused by a persistent imbalance between supply and demand. The U.S. housing supply shortage was nearly 4 million by 2024 (Freddie Mac), which stem from factors such as the “lock-in effect,” where homeowners with low mortgage rates are reluctant to sell, rising costs that slow new construction, and restrictive zoning. As a result, prices are out of reach for many Americans. Today, 60% of American households cannot afford a $300,000 home (National Association of Home Builders), a startling statistic that reflects the gap between housing costs and income. While homeownership remains critical to financial discipline and long-term prosperity, many young professionals feel relegated to renting indefinitely.
These pressures also impact established homeowners. Paradoxically, as house prices rise, so do financial burdens, creating a strain on finances that is only alleviated when homeowners sell. The data agrees: property taxes increased 14% between 2019 and 2023 (The Wall Street Journal), while homeowners insurance premiums nearly doubled between 2018 and 2024 (Harvard University Joint Center for Housing Studies).
Furthermore, wages have not kept pace with housing costs. In August 2024, a median-income household would spend 42% of its income on a median-priced home, an increase of 13% from 2020 and well above HUD’s 30% affordability threshold (Federal Reserve Bank of Atlanta). This growing gap between paper wealth and practical affordability turns a foundation for financial security into a source of stress.
Empty nesters and retirees also face hurdles. Many are unable to make savings due to capital gains tax concerns, with 8% of home sales exceeding the $500,000 exemption limit in 2023 (Cotality). This leaves them stuck in homes that no longer meet their needs and unable to free up equity to finance retirement, healthcare or inheritance planning.
Traditional pension structures are also changing. Fewer employees have access to defined benefit pensions (Cornell), and Social Security typically replaces only about 40% of pre-retirement income—roughly half of what most retirees need (Institute for Economic Policy). Although home equity is often their largest asset, many older Americans cannot easily access it after retirement.
Perhaps most frustrating is the “wealth paradox.” Despite record levels of home equity in the first quarter of 2025, Americans used just 0.41% of this available wealth (ICE). High interest rates have made traditional access to equity unaffordable, while strict lending requirements create barriers when homeowners need liquidity most. Self-employed people, who represent 10% of the US workforce (US Bureau of Labor Statistics), have particular difficulty accessing their home equity through conventional means because they are often unable to provide required documents, such as W-2s.
Why the Dream Persists (and Should)
Yet the dream of homeownership persists, for both its emotional and financial benefits.
Research shows that 90% of homeowners report increased overall happiness since purchasing their home, and 56.5% say they are still proud to be homeowners despite increasing financial pressures. Homeownership also strengthens community ties, as owners tend to stay in their neighborhoods longer and invest more in maintaining their properties.National Association of Real Estate Agents).
The financial benefits of homeownership, while more complex, are still significant. Building equity, rather than paying rent, is still a powerful strategy for increasing prosperity. Fixed-rate mortgages offer predictable housing costs that protect homeowners from inflation and rising rents. And despite recent tax changes, homeownership offers long-term retirement security.
Re-enacting the dream
Three in four homeowners (75.6%) say homeownership is still part of the American Dream (Home tap), but for that dream to remain viable, it must evolve to meet current economic realities. This requires both systemic changes and shifts in the way individuals approach purchasing and owning a home.
The financial sector must develop flexible products that reflect modern career paths. Traditional mortgages are designed for people with stable, W-2 verified income, but do not reflect today’s dynamic job market. We need alternative home equity solutions that offer broader qualification criteria and do not require additional monthly payments, especially for the self-employed and those facing temporary financial setbacks.
Policy must also evolve. Property tax reforms could provide relief for long-term homeowners, especially those on fixed incomes. And zoning changes can increase the supply of housing, which can moderate prices for starters.
While institutional innovation is essential, homeowners also play a role. Instead of viewing homes solely as living spaces, they should view them as dynamic financial assets that need to be managed strategically. Home equity is not just an end goal, but a tool to achieve financial goals. Homeownership plans must prioritize flexibility and liquidity while recognizing that circumstances will change.
A path forward
Home ownership remains a worthy goal. The path to achieving this – and sustaining it – needs to be reconsidered. The financial sector must create innovative solutions that address modern challenges, policymakers must rethink outdated regulations, and individuals must approach homeownership with more flexibility and strategy.
With a willingness to adapt and reimagine traditional approaches, we can preserve the dream of homeownership for future generations while addressing current economic realities. The American Dream is not dead, but it must evolve.
Jeffrey Glass is the CEO and co-founder of Hometap.
This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners. To contact the editor responsible for this piece: [email protected].
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