The Rate Debate is a Distraction
- Skye Laudari
- 20 hours ago
- 4 min read
For the past two years, the housing conversation has revolved around one question:
When will mortgage rates come down?
The implication is clear: if rates fall, affordability returns.
But that’s not how the housing market actually works.
Rates don’t solve affordability — they just reprice it.
Most homebuyers finance their purchase. That means home prices don’t float independently — they move with financing capacity.
When rates fall, monthly payments fall… briefly. And then prices rise to absorb the extra buying power.
We’ve seen this pattern repeatedly over decades:
Lower rates increase demand
Demand pushes prices up
Affordability remains constrained
The buyer is still stuck — just at a higher price level
And when prices rise, the benefits accrue disproportionately to existing homeowners — those already building equity — while non-homeowners are left further behind. That dynamic is a major reason the age of the first-time homebuyer has climbed to record highs and access to ownership feels increasingly out of reach.
Rate relief is not a durable affordability strategy. It’s often just a mechanism for shifting who can bid more.
The deeper issue is structural: Americans can only finance housing one way.
Main Street buyers are offered a single tool: Debt.
A traditional mortgage asks households to leverage themselves to the maximum, often with:
high monthly payments
concentrated risk
limited flexibility
years of delayed entry into ownership
Meanwhile, professional real estate investors finance housing differently.
They use a combination of debt and equity capital. That mix reduces risk, improves cash flow, and allows them to act decisively.
The question is simple: Why is equity financing standard for Wall Street, but unavailable to everyday homebuyers?
The missing solution is to finance part of the equity — not just the debt.
If we want meaningful affordability, we need to expand the architecture of housing finance beyond mortgages alone.
Co-investment models do exactly that:
A buyer purchases a home
An investor contributes a portion of the equity
The buyer takes a smaller mortgage
Monthly payments drop immediately
The buyer remains the homeowner
Value is shared only when the home is eventually sold
And if mortgage rates are still the lens through which we want to evaluate affordability, the impact is material: reducing the mortgage balance in this way can lower monthly costs by an amount equivalent to a 150–250 basis point drop in interest rates overnight — without requiring rates to move at all.
What about the objection: doesn’t shared equity give up too much upside?
This is the most common critique of shared appreciation models: that the homeowner may share future gains.
It’s a fair question — but it often misses the real comparison.
For many households, the choice is not: co-investment vs. buying the home entirely on their own.
The choice is: owning a meaningful share of an appreciating asset… or owning nothing at all while renting indefinitely.
Owning the majority of a home is far better than renting and receiving 0% of the upside while watching prices continue to rise out of reach.
And, importantly, even for buyers who could purchase without a partner, co-investment can still be a rational tool: reducing monthly burden, avoiding over-leverage, and preserving financial flexibility.
More broadly, we need a mindset shift away from homeownership as an all-or-nothing proposition. Housing is the only major asset class where everyday Americans are told the only way to participate is with maximum debt and full exposure. A more flexible spectrum of ownership would better reflect how capital markets work everywhere else. Most Americans already participate in diversified, fractional ownership every day through their retirement accounts, and they don’t need to buy an entire company to benefit from its growth.
This isn’t about taking value away from consumers. It’s about making ownership possible sooner, with lower monthly burden and lower financial risk.
And importantly: this doesn’t require lowering home prices or hurting existing homeowners.
One of the political challenges in housing today is obvious:
No administration wants to improve affordability by “crashing” the value of Americans’ homes.
Shared equity doesn’t depend on price declines. It works within the existing market by changing how the home is financed — not by devaluing the asset.
That makes it one of the rare affordability levers that can scale without creating winners and losers.
What comes next: modernizing the housing capital stack
The long-term solution to housing affordability will not come from any single interest rate cycle or one-time intervention.
It will come from modernizing the underlying architecture of housing finance.
For nearly a century, the American system has treated homeownership as a binary choice: rent, or take on a maximum mortgage.
But the broader capital markets don’t work that way. Every other major asset class allows fractional participation, diversified exposure, and flexible risk structures — housing uniquely does not.
Housing should be no different.
Co-investment represents the beginning of a more modern capital stack for owner-occupied housing that can:
reduce monthly costs without requiring home price declines
expand access to ownership without excessive leverage
align long-term investment capital with household stability
complement, rather than replace, the mortgage market
The next phase of evolution is not about whether shared equity should exist. It’s about how it becomes a safe, standardized, and scalable part of the system.
That will require collaboration across the industry:
lenders integrating equity alongside debt
policymakers establishing clear consumer protections and underwriting standards
institutional capital participating transparently and responsibly
new infrastructure that treats equity financing as a normal affordability tool, not a niche exception
The affordability challenge is real — and so is the opportunity to rethink how Americans access ownership.
The question now is whether we continue debating incremental rate moves, or whether we build the next generation of housing finance.
The next generation of housing finance will be built through real collaboration across the ecosystem.
Connect with us to discuss how co-investment can expand affordability and become a scalable part of the mainstream housing finance system.
Skye Laudari is the Co-Founder and CEO of Crib Equity, a shared equity platform expanding access to homeownership through co-investment.
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