Americans collectively hold almost $35 trillion in housing wealth, a nearly 80% increase since early 2020 (Federal Reserve). Yet, despite this unprecedented equity accumulation, many homeowners feel less financially secure than ever. A recent Hometap survey found that almost half (54.5%) of homeowners report feeling financially stressed, with 46% citing rising housing costs as their top concern. This contradiction is at the heart of today’s housing market, where aspiring buyers face soaring entry costs and existing homeowners face both high costs to stay in their homes and frustration that their wealth is trapped in their properties.
Despite these challenges, homeownership offers compelling emotional and financial benefits that justify its importance in American life. As a result, we face a critical question: How do we preserve the dream of homeownership while adapting it to current economic complexities? The answer may lie in alternative financing options.
The modern homeownership paradox
The homeownership journey has never been more daunting, with obstacles at every stage of the lifecycle.
For first-time buyers, the barriers are particularly steep. Home prices surged 47% between February 2020 and February 2025 (The Wall Street Journal), driven by a persistent supply-demand imbalance. The U.S. housing supply gap reached nearly 4 million in 2024 (Freddie Mac), stemming from factors including the “lock-in effect,” where homeowners with low mortgage rates are reluctant to sell, rising costs that slowed new construction, and restrictive zoning regulations. As a result, prices are beyond the reach of 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 vital for financial discipline and long-term wealth, many young professionals feel indefinitely relegated to renting.
This squeeze also affects established homeowners. Paradoxically, as home values rise, so do financial burdens — creating a cash strain that’s only relieved when homeowners sell. The data agrees: property taxes jumped 14% from 2019 to 2023 (The Wall Street Journal), while homeowners insurance premiums almost doubled from 2018 to 2024 (Joint Center for Housing Studies of Harvard University).
What’s more, wages haven’t kept pace with housing costs. In August 2024, a median-income household would spend 42% of its income on a median-priced home, up 13% from 2020 and well above HUD’s 30% affordability threshold (Federal Reserve Bank of Atlanta). This growing disconnect between paper wealth and practical affordability transforms a foundation for financial security into a source of stress.
Empty nesters and retirees face hurdles, too. Many are unable to downsize due to capital gains tax concerns, with 8% of home sales in 2023 exceeding the $500,000 exemption limit (Cotality). This traps them in homes that no longer suit their needs, and prevents them from unlocking equity to fund retirement, healthcare, or legacy planning.
Traditional retirement structures are also shifting. Fewer workers 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 (Economic Policy Institute). Though home equity often represents their largest asset, many older Americans find themselves unable to easily access it in retirement.
Perhaps most frustrating is the “wealth paradox.” Despite record home equity levels in the first quarter of 2025, Americans tapped into just 0.41% of this available wealth (ICE). High interest rates have made traditional equity access prohibitively expensive, while strict credit requirements create barriers when homeowners need liquidity most. Self-employed individuals, who represent 10% of the American workforce (U.S. Bureau of Labor Statistics), face particular difficulty accessing their home equity conventionally, as they’re often unable to furnish required documents, such as W-2s.
Why the dream persists (and should)
Still, the dream of homeownership endures, stemming from both its emotional and financial benefits.
Studies show that 90% of homeowners report greater overall happiness since purchasing their homes, and 56.5% say they still feel proud to be homeowners, despite mounting financial pressures. Homeownership also strengthens community connections, as owners tend to remain in their neighborhoods longer and invest more in property maintenance (National Association of Realtors).
Homeownership’s financial advantages, though more complex, are still significant. Building equity, rather than paying rent, is still a powerful wealth-growing strategy. Fixed-rate mortgages provide predictable housing costs that insulate homeowners from inflation and rising rents. And despite recent tax changes, homeownership offers long-term retirement security.
Reimagining the dream
Three in four homeowners (75.6%) say homeownership is still part of the American Dream (Hometap), but for that dream to remain viable, it must evolve to meet today’s economic realities. This requires both systemic changes and shifts in how individuals approach home buying and owning.
The financial industry needs to develop flexible products that reflect modern career trajectories. Traditional mortgages were designed for individuals with steady, W-2-verified income, but they don’t reflect today’s dynamic labor market. We need alternative home equity solutions that offer broader qualification criteria and do not require additional monthly payments, especially for self-employed individuals and those facing temporary financial setbacks.
Policies must also evolve. Property tax reforms could provide relief for long-term homeowners, particularly those on fixed incomes. And zoning changes could increase housing supply, moderating prices for first-time buyers.
While institutional innovation is essential, homeowners also have a role to play. Rather than viewing homes solely as residential spaces, they should see them as dynamic financial assets to strategically manage. Home equity isn’t just an end goal, but a tool for achieving financial objectives. Homeownership plans should prioritize flexibility and liquidity, while recognizing that circumstances will change.
A path forward
Homeownership remains a worthy aspiration. The path to achieving — and sustaining — it must be reconsidered. The financial industry should create innovative solutions that address modern challenges, policymakers should reconsider outdated regulations, and individuals should approach homeownership with greater flexibility and strategy.
With a willingness to adapt and reimagine traditional approaches, we can preserve the homeownership dream for future generations while addressing current economic realities. The American Dream isn’t dead, but it does need to evolve.
Jeffrey Glass is the CEO and Co-Founder of Hometap.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: [email protected].