The Rising Cost of Homeownership and What it Means for Inheritances
If you’re relying on passing down an inheritance from the sale of your property, you might want to think again. While older Americans are expected to pass down trillions of dollars in housing wealth, new data shows that rising costs of homeownership may be a threat to that plan. Sometimes, hanging onto the house isn’t the thing that makes the most sense.
Baby Boomers alone hold roughly $19 trillion dollars in equity, according to Harvard Joint Center for Housing Studies’ Stat of the Nation’s Housing 2026 report. And while the home can be worth hundreds of thousands of dollars, some homeowners are lacking the income needed to keep up with the home’s bills in their retirement years.
Mortgage debt is a big part of the squeeze. In 2022, 41% of homeowners aged 65 to 79 carried mortgage debt, up from roughly 24% in 1989. Among homeowners 80 and older, the share reached 31%, up from about 3%. “Rising mortgage debt among older homeowners directly shrinks the size of the eventual inheritance,” says Hannah Jones, senior economist at Realtor.com. “Balances typically get paid off from the estate, or the home gets sold to cover them, before anything passes to heirs.”
And even a home with no mortgage at all isn’t a guaranteed windfall. Property taxes, insurance, and upkeep don’t stop when the home is paid off—for a lot of families, the house is still a significant financial burden.
The takeaway for anyone counting on a future inheritance from a home is that while it’s nice to think about, it’s not a guaranteed plan. And if you’re in your retirement years and are hanging on to a large home that has significant equity, it may make sense to think about downsizing rather than continuing to sink money into a home that’s too big and takes a lot of time and money to care for.
If you’re weighing any of these thoughts, let’s talk about what actually makes sense for your timeline.
