Retirees counting on home equity may face financial shortfalls

For generations, homeownership has been one of the primary ways Americans built wealth and passed it on to loved ones.

Now, financial advisers and housing experts warn that many older homeowners may be counting too heavily on their homes as retirement safety nets as they discover their properties sell for less than expected, according to a recent report published by The New York Times.

Americans ages 70 and older collectively hold about $13 trillion in housing wealth, according to an analysis published by Redfin in March.

But a more recent study from the Federal Reserve Bank of Philadelphia found that older homeowners often receive lower prices when selling compared with younger owners — even when properties are otherwise similar.

The discount grows with age. Researchers found that an average 80-year-old seller could receive about 5% less than a 45-year-old homeowner, the Times report explained.

The consequences can be severe for retirees relying on home equity to finance a new home purchase, assisted living or long-term care.

“The real question is, where are they transitioning to?” Dan Sudit, a wealth adviser and partner at Crewe Advisors in Salt Lake City, told the Times. “It might not be a two-bedroom or a one-bedroom, but might wind up being a studio-type unit.”

Aging homes, aging owners

Housing professionals say one major factor behind the pricing gap is deferred maintenance.

Older homeowners are less likely to renovate kitchens and bathrooms, complete repairs or modernize interiors before listing their homes.

“Unless something’s broken, they don’t fix it,” Amy Bubes, a real estate agent in Atlanta, told the Times.

Outdated aesthetics can also deter buyers who already face affordability pressures.

“You’ve got the avocado bathtub and yes, the fridge works fine, but it’s harvest gold,” said Beverly Grace, owner of Grace Realty and Property Management in Seminole, Florida. “It all looks really wonderful to them, but they didn’t change anything to go with the times.”

Reverse mortgages still face resistance

Some industry professionals argue that reverse mortgages could help older homeowners unlock equity without rushing to sell — but the products continue to carry stigma decades after their introduction.

Michael Banner, a reverse mortgage educator and leader at American Pacific Mortgage, recently told HousingWire‘s Reverse Mortgage Daily that misinformation continues to limit the adoption of the HECM for Purchase program.

“This product is surrounded by more misinformation and half-truths than any other product in the history of the financial world,” Banner said. “There’s only one way to do it: education.

“It’s like annuities. Forty years ago, people didn’t trust them. Now they’re mainstream [because] you had the biggest insurance companies in the country with millions of agents, educating and pushing. It’s going to take us a while because we haven’t even started yet.”

Banner said reverse mortgages developed a poor reputation decades ago when the products carried higher costs and fewer borrower protections.

“The horror stories are real. But the truth is, at least for the last 16 years, it’s been a great product,” he said. “We protect the younger borrower, the surviving borrower, we protect the estates. Nobody can do what we do. But when was the last time you saw anybody say that, other than on a reverse mortgage group on LinkedIn?

“Last year, Realtors sold 5 million homes. I think I don’t have it in front of me, but I believe 16% or 17% of those homes were sold to people above the age of 62 — meaning 800,000 homes were sold to people above 62. I don’t remember how many reverse mortgage purchases we did. I think something like 300.”

Choosing certainty over risk

The New York Times said that older homeowners are also more likely to accept cash offers from investors or use private listings that bypass broader market exposure.

While those deals can simplify transactions, experts say they frequently result in lower sale prices. For some retirees, however, speed and certainty outweigh maximizing profit.

Bob Bozek, 73, and his husband, Dan Driscoll, 81, sold their condominium near Fort Lauderdale, Florida, in 2024 — citing rising insurance costs, health concerns and increasing homeowners association fees.

“Even though what we settled for was lower than what we’d hoped for, it was cash in hand,” Driscoll told the Times. “We were so grateful.”

The couple moved into a smaller home in Maryland and said the reduced financial pressure was worth the compromise.

“We were lucky to have done it when we did,” Bozek said. “We still have friends down there and my goodness — the condo market fell completely.”

This article was written by Jonathan Delozier and generated with the assistance of HousingWire Automation. It was reviewed by a HousingWire editor before publication. The system helps convert company announcements and industry data into HousingWire-style news coverage.