The American Dream Isn't Dead, It Just Outgrew the 30-Year Mortgage

Marisa Calderon is President and CEO of Prosperity Now, a national nonprofit advancing economic mobility and financial security for U.S. households.

Homeownership has long been seen as a cornerstone of financial stability in America – a way to build wealth, invest in the future, and secure a place to call your own. But the tools we use to access it have not kept pace with the way people actually live and work today.

The American Dream is still alive, but the traditional 30-year mortgage no longer matches the moment. 

Nearly half of all renter households in the United States now spend more than 30 percent of their income on housing, according to the Census Bureau. That leaves little room for saving, investing, or planning for the long term. Meanwhile, in some metro areas, the median down payment for a single-family home has climbed past six figures, effectively shutting the door for most would-be buyers. 

This is not simply a matter of rising prices. It reflects a deeper structural flaw in how we finance homeownership.

The traditional 30-year mortgage was created in a time when a single income, a steady job, and long-term residency were the norm. Today, that same mortgage often requires two incomes, years of accumulated wealth, and a level of predictability that few households can count on. Remote work, multigenerational living, and nontraditional income streams are now common features of American life. Yet our mortgage system – whose products are largely constrained by regulation and by giant companies under government conservatorship like Fannie Mae and Freddie Mac – still operates as if nothing has changed. Most aspiring homeowners are still expected to fit into a model designed for a different era. 

While this mismatch is pushing more families to the sidelines, a new set of alternative models is opening the door to options that better reflect today’s realities. These approaches show promise, but they will only succeed if they’re designed with intention and supported by smart policy. 

New Models for Modern Lives

Since its inception, the U.S. mortgage market has operated as a binary: either you qualify and own, or you don’t. But newer models are challenging that structure by introducing options that address affordability and allow people to live in owned homes in ways that reflect their current household needs. Co-ownership, cooperative housing, and shared appreciation are gaining traction as more practical, flexible, and affordable entryways to homeownership, especially for first-time buyers, multigenerational families, and those shut out of traditional mortgage financing.   

Each of these models offers clear benefits: lower financial barriers to entry, shared financial responsibility, and lower default risk. They aren’t theoretical. They're already working. And while these three are examples of responsible entry points to homeownership, not all novel solutions are created equal. The strength of these models is in how they are structured and who they are designed to serve. 

But private sector innovators are doing so in a regulatory grey zone, which, if left unaddressed, could quickly become a danger zone.

Not All Innovation Is Progress

When designed with intention, strong consumer safeguards, and aligned incentives, shared appreciation, and co-ownership models can be powerful tools for expanding access to homeownership, particularly for low- to moderate-income households.

Research from the Lincoln Institute of Land Policy underscores this point. In an analysis of 58 shared equity programs, 95% of homes remained affordable to buyers earning 80% of the median income (AMI) or below. Homeowners gained an average of $14,000 in equity, with move-out rates significantly lower than in the broader housing market. These results didn’t happen by chance – they were the product of programs built with stewardship, resale protections, and transparent terms. 

But not all emerging models follow this example. Some private-market variations include variable resale formulas that disproportionately favor investors, siphoning appreciation away from homeowners. Others feature rigid repayment triggers, ambiguous contract terms, or hidden fees that leave buyers exposed to risk they don’t fully understand. Even financially savvy borrowers can struggle to distinguish between models designed to build owner assets and those designed to extract. 

If this sounds familiar, it should. In 2008, it wasn’t just subprime lending that triggered the housing crash – it was financial engineering with no oversight or transparency. Today, we’re at risk of repeating that cycle under a different name. 

We Need Guardrails

Innovation can expand opportunity, but only if it’s grounded in transparency, consumer protection, and accountability. First, we need clear, national definitions and disclosure standards for co-ownership, cooperative housing, and shared appreciation. Borrowers should not need a law degree or an advanced economics background to understand the terms of their own deal structure. 

Second, we must build systems of stewardship – consumer education, pre-purchase counseling, and structured exit options that reflect real-life challenges like job changes, caregiving responsibilities, or medical emergencies.

Third, regulators – from HUD to the Treasury – must define what qualifies as bona fide home equity and what constitutes disguised debt or speculative extraction. If a financial product behaves like a loan, it should be regulated as one. If it’s marketed as equity, it must include protections that ensure homeowners share in the upside, rather than investors enjoying the spoils of home equity gains at the expense of the homeowner.

The Time to Act Is Now

The 30-year mortgage will continue to serve many buyers, but it cannot remain our only pathway to homeownership – not when rising costs, stagnant wages, and evolving family structures are redefining what financial stability looks like in America.

People want to own homes. They want to invest in their neighborhoods and build their futures. But they need financing tools that match how they live and earn today.

Co-ownership, cooperative housing, and shared appreciation present a promising new chapter in American homeownership. These models offer real solutions when designed with care, transparency, and the interests of both investors and homeowners in mind. The infrastructure already exists. The demand is real. And the market is responding.

And without thoughtful regulation, we risk blurring the line between models built in good faith and those engineered primarily for profit extraction. 

The question now is whether we will lead with policy that protects and empowers consumers, or allow the market to race ahead without the framework needed to distinguish opportunity from exploitation. 

Policymakers have the chance to ensure that innovation serves the public good, not just private interests. 

Homeownership is still one of the most powerful engines of wealth-building in this country. We can’t keep trying to power it with yesterday’s system. 

It is time to build a new blueprint – one that is fair, flexible, transparent, and grounded in the way Americans live today.

Only then can we say that the dream isn’t just alive, but finally within reach.

The opinions shared in this article are the author’s own and do not reflect the views of any organization they are affiliated with.

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