The hidden cost of the American Dream: Why homeownership in 2026 feels broken

If you ask most Americans what the "American Dream" looks like, homeownership still sits at its center. But the excitement of closing on a home and getting the keys increasingly gives way to a more complicated reality - one defined by rising costs, financial stress, and a system that many homeowners feel unprepared to navigate.

A survey of 1,000 homeowners conducted by Hometap found that 3 in 4 respondents (75.6%) still believe homeownership is part of the American Dream. Yet more than half (54.5%) also describe themselves as moderately to extremely financially stressed. More than 60% say they're spending a greater share of their income on housing than ever before, and nearly 80% believe their costs are rising faster than their income.

They're right.

Across the board, the cost of owning a home has grown far beyond what most people expected - or were prepared for. And it's not just about monthly mortgage payments. Insurance, property taxes, utilities, maintenance, and renovation costs have all surged. Though homeowners are holding a record amount of equity, most aren't positioned to use that equity strategically. And as this article from Hometap reveals, far too many are stuck in a cycle of "just trying to keep up."

A Dream Without a Manual

The reality is, most homeowners don't know exactly what they're signing up for. And how would they?

For many first-time buyers - particularly those who are becoming the first homeowners in their families - the transition from renting to owning comes with a steep and largely invisible learning curve. There's no standardized guidance for what homeownership actually costs or requires once the paperwork is signed.

Homeowners are often left to figure out the difference between homeowners insurance and a home warranty, how to budget for unexpected repairs, or how to contest a property tax assessment. That knowledge gap compounds the financial stress homeowners already feel. And unlike renters, they have no landlord to call if the furnace breaks down.

What's Driving the Pressure

Several factors beyond inflation alone are widening the gap between what homes cost and what households can afford.

Stagnant wage growth relative to home prices. In 1970, the typical single-family home cost roughly 3.9 times the median household income. That ratio has nearly doubled, reaching 7.3 today.

A chronic housing shortage. The U.S. faces a documented deficit of 4.7 million housing units. With millennials entering peak homebuying years and older homeowners staying put, inventory has remained persistently tight - keeping prices elevated.

Surging "hidden" costs. Home insurance premiums rose an average of 21% in 2023, partly due to increased climate-related risk, and an additional 11% in 2024. In high-risk states, some insurers have exited the market entirely - between 2020 and 2023, 14 insurers in South Carolina ran out of funds, driving further premium increases for remaining policyholders. Property taxes compounded the pressure, rising 6.9% in 2023 - double the rate of inflation that year. Nonmortgage costs, such as insurance, property taxes, and utilities, have risen 35% since 2019.

Limited tax relief. A 2025 increase to the SALT deduction cap offers some relief for middle-income homeowners in high-tax states, but it doesn't address the underlying drivers of rising ownership costs.

More expensive homes. Home prices have surged 60% from 2019 to early 2025, pricing out a growing share of would-be buyers before they ever reach the closing table - and making it a stretch for many others.

Equity Is There - But Out of Reach

Despite the financial squeeze, homeowners are sitting on substantial equity. The challenge for many is accessing and using it strategically. The Hometap survey found that even though home values have appreciated, most households don't feel positioned to use that equity meaningfully, leaving them in a cycle of managing costs rather than building long-term financial stability.

What Homeowners Can Do - and What Policymakers Are Trying

Navigating the modern cost of homeownership is harder without the right resources, but both individuals and governments have started to develop tools to help.

For homeowners facing rising property tax bills, many counties offer formal appeal processes. Hiring a property tax consultant or filing an independent appraisal challenge can result in meaningful savings, particularly in markets where assessed values lag behind real market changes. Similarly, insurance costs can sometimes be reduced by comparing carriers, bundling policies, or strategically investing in home improvements - retrofits like storm shutters, updated roofing, or fire-resistant landscaping that reduce risk profiles and, in some states, qualify homeowners for premium discounts.

On the budgeting front, HUD funds a nationwide network of approved housing counseling agencies that provide free or low-cost guidance on budgeting, mortgage assistance, and home maintenance planning. The Consumer Finance Protection Bureau's "Owning a Home" tools help homeowners understand their loan terms, compare interest rates, and explore refinancing options.

At the policy level, some cities and states have experimented with approaches aimed at improving affordability. Minneapolis approved its 2040 Comprehensive Plan in 2018, eliminating single-family-only zoning citywide and allowing duplexes and triplexes on any residential lot. The broader package of reforms, which also included eliminating parking minimums and upzoning along transit corridors, has been credited with helping keep rent growth flat in a period when national rents rose 22%.

U.S. federal efforts have focused primarily on the supply side. Bipartisan proposals to streamline permitting processes and incentivize accessory dwelling unit (ADU) construction have gained traction in Congress, though no comprehensive housing package has cleared both chambers. In the near term, housing advocates broadly agree: Without an ongoing increase in home supply, the affordability gap is unlikely to close on its own.

Homeownership's Resilient Appeal

Despite the strain, the Hometap survey data reveals that homeowners are still attached to homeownership. More than three-quarters of respondents (76%) said they still believe owning a home has value, and more than half (56.5%) said they feel proud to be a homeowner - even amid the financial stress.

That connection reflects how deeply homeownership is woven into Americans' financial and personal aspirations. Sustaining it at scale, researchers and housing advocates argue, will require more than individual resilience - it will require systems, tools, and policies that support homeowners not just at the time of purchase, but across their full journey.

Methodology: Hometap surveyed 1,000 homeowners in the U.S. ages 18 and over through AYTM (Ask Your Target Market) in June 2025. The survey examined sources of financial stress, perceptions of income relative to homeownership costs, and behavioral trade-offs respondents made in response to rising expenses.

This story was produced by Hometap and reviewed and distributed by Stacker.

Copyright 2026 Stacker Media, LLC

This story was originally published April 28, 2026 at 7:30 AM.