30 Million US Homes Without Mortgages: A Warning for the Housing Market

The Rise of Homeownership Without a Mortgage

Housing affordability has become a major concern for many Americans, with the average buyer needing a six-figure salary to afford a typical home. Despite this, millions of Americans have already achieved financial freedom by paying off their mortgages entirely. This trend highlights a growing shift in how homeowners are managing their finances and building long-term wealth.

According to a report from Fortune, citing a recent analysis by Goldman Sachs, the percentage of U.S. homeowners without a mortgage has increased significantly over the past decade. In 2010, about 33% of homeowners were mortgage-free, but by 2023, that number had risen to 40%. With approximately 86 million homes in the country, this means more than 30 million homes are now owned outright.

This increase in mortgage-free homeowners is driven by several factors, including rising home values and a strong focus on paying down debt. As home prices have climbed, so too has the equity that homeowners can build. According to ICE Mortgage Technology, U.S. borrowers held $11.5 trillion in “tappable” home equity as of the second quarter of 2025. This refers to equity that can be accessed through loans or lines of credit while still maintaining at least a 20% cushion.

However, despite the availability of this equity, many homeowners are choosing not to tap into it. Goldman Sachs analyst Arun Manohar noted that today’s homeowners are far less inclined to use their home equity compared to those in the early 2000s. Instead, they are focused on paying off their mortgages and achieving full ownership of their homes.

The Impact of Rising Home Values

One of the main reasons for the increase in home equity is the sharp rise in home prices over the past five years. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index has surged by more than 50% since 2020. This growth has benefited existing homeowners, who now see their properties appreciate in value and their equity grow.

For first-time buyers, however, the situation is much more challenging. High home prices, elevated mortgage rates, and limited inventory have made it increasingly difficult to enter the housing market. The National Association of Realtors reported that the share of first-time homebuyers fell to 24% in 2024 — a record low. This decline has created a “chicken-and-egg” dilemma, where older homeowners who bought their homes decades ago are reluctant to sell due to current high mortgage rates. As a result, fewer homes are available for purchase, keeping prices elevated and making it harder for younger generations to buy a home.

The Cost of Buying a Home Today

The financial requirements to buy a home in the U.S. have also risen sharply. According to Realtor.com, a typical household would need an annual income of $118,530 to afford a median-priced home of $402,500. This is more than 50% higher than the current median household income of around $77,700. In states like California, where housing costs are even higher, the required income can exceed $210,557.

Despite these challenges, real estate remains a popular path for wealth building. One of the key advantages of real estate is its ability to act as a hedge against inflation. As inflation rises, home values typically increase, reflecting higher costs for materials, labor, and land. Rental income often follows suit, providing landlords with a steady stream of income that can adjust with inflation.

Even during economic downturns, high-quality, essential properties can continue to generate passive income through rent. This makes real estate a reliable asset that can work for you regardless of broader market conditions.

Investing in Real Estate Without Owning a Property

While buying a home outright is one way to invest in real estate, it’s not the only option. Crowdfunding platforms like Arrived have made it easier than ever for everyday investors to gain exposure to the real estate market. These platforms allow individuals to invest in rental homes with as little as $100, without the hassle of dealing with tenants or property maintenance.

Another option is to invest in owner-occupied homes through funds like Homeshares’ U.S. Home Equity Fund. This approach allows accredited investors to gain direct exposure to residential properties in top U.S. cities, with target returns ranging from 14% to 17%.

For those interested in commercial real estate, platforms like First National Realty Partners (FNRP) offer opportunities to invest in grocery-anchored properties leased by national brands such as Whole Foods, Kroger, and Walmart. These investments come with triple net (NNN) leases, which reduce the risk of tenant-related costs cutting into returns.

With a minimum investment of $50,000, FNRP provides a hands-off way to diversify a portfolio and benefit from the stability of essential retail spaces.

As the real estate market continues to evolve, new opportunities are emerging for investors looking to build wealth without the responsibilities of traditional property ownership. Whether through crowdfunding, equity funds, or commercial real estate, there are now more ways than ever to participate in the housing market and benefit from its long-term growth.