Rising mortgage‑free ownership hints at deepening affordability problems and stubborn supply constraints.
More than 30 million American households no longer send a monthly check to a lender. New data cited by Fortune show the share of U.S. homeowners without a mortgage climbed from 33 percent in 2010 to 40 percent in 2023, a jump that reshapes both household balance sheets and the broader real‑estate landscape.
Mortgage‑free ownership jumps as housing costs soar and equity inflation persists
The increase means roughly two out of every five homeowners now control their property free and clear, and their wealth is swelling. ICE Mortgage Technology estimates borrowers held $11.5 trillion in “tappable” equity by early 2025. Yet, as analyst Arun Manohar notes, owners have been reluctant to borrow against that cushion, focusing instead on complete repayment.
| Key metric | 2010 | 2023 |
|---|---|---|
| Share of homeowners without a mortgage | 33 % | 40 % |
| Homes held free and clear (approx.) | 28 million | 30 + million |
Source: Fortune analysis of Census and Goldman Sachs data
Why does this matter? Because the very forces enriching long‑time owners—surging prices and limited inventory—are squeezing newcomers. Over the past five years the S&P CoreLogic Case‑Shiller index has leapt more than 50 percent, lifting equity for some while pushing median prices beyond the reach of many.
Why a growing pool of mortgage‑clear owners worries economists and first‑time buyers? Fewer outstanding loans may sound healthy, yet economists flag three intertwined risks:
- Locked‑in inventory: Older owners, sitting on low tax bases and sub‑4 percent mortgage memories, hesitate to sell.
- Persistent price pressure: With listings scarce, bidding wars persist even as rates hover near two‑decade highs.
- Shrinking on‑ramp: First‑time buyers accounted for just 24 percent of purchases in 2024—a record low, according to the National Association of Realtors.
Caught in that squeeze, would‑be buyers now need about $118,500 in annual income to afford a median‑priced U.S. home, Realtor.com calculates. In California, the figure rockets above $210,000. Who can clear that bar?
Key figures illustrate the disconnect between home‑equity gains and housing affordability
Consequently, analysts warn of a “chicken‑and‑egg” cycle: elevated rates discourage downsizing, tight supply sustains high prices, and new entrants stay sidelined. Meanwhile equity accumulates where it already exists. Sound sustainable to you?
Mortgage‑free living is great for the households that achieved it—less debt, more security, and sizeable paper gains. However, when four in ten owners are effectively removed from the lending market, churn slows and access narrows. Policymakers eyeing affordability may need to expand down‑payment assistance, encourage new construction, or rethink zoning to break the logjam. Otherwise, tomorrow’s buyers could find the real‑estate ladder pulled even higher out of reach.