The U.S. housing market is one of extremes: Prices have never been higher, down payments are bigger than ever, and buyers are the oldest on record. Another striking statistic: A record high share of first-time homebuyers are using an inheritance to finance their down payment.
That’s according to the National Association of Realtors’ (NAR) latest report, which finds 7% of first-time buyers used an inheritance for their down payment last year. That’s more than double the share of repeat buyers who are doing the same.
The trend highlights the growing disparity between who can buy a home in the U.S. and who can’t. Amid higher rates and sky-high prices, the typical buyer is older and wealthier than ever before. In fact, first-time buyers—who tend to be younger and less wealthy than other buyers—decreased to 24% of the market share this year, compared to 32% last year. That is the lowest share since NAR began collecting the data in 1981. Meanwhile, the median age of first-time buyers was also up to 38 from 35 last year, a record high, and the median household income of first-time home buyers was $97,000.
At the same time, first-time buyers are putting down the largest down payments in almost 30 years to compete with the 26% of buyers who paid all cash for their home, also an all-time high. For increasingly more first-time buyers, NAR’s research shows an inheritance is the only way they can bridge the affordability gap.
The news also comes as families and financial firms anticipate an estimated $84 trillion in wealth to be passed on over the next two decades. Of course, only certain families will be able to leave an inheritance, giving their heirs a financial leg up in every respect.
“These inheritances have become a lifeline for all these young buyers,” says Alexandra Mysoor, CEO of Alix, an estate settlement platform. “Sometimes it’s a small amount that goes to the beneficiaries, right? And it’s still life changing.”
Though wealthier Americans are able to leave more sizable inheritances to their heirs, Mysoor says the data highlights the need for Americans on all income and wealth levels—not just the 1%—to effectively settle their estates. Saving even a few thousand dollars in that process that can then go to heirs can make a huge difference, she says, allowing the younger generations to do things like save up for a down payment more quickly.
As more older Americans pass away and begin leaving money and other assets to millennials and members of Gen Z, she expects the share using it to buy homes to continue to grow.
“Inheritance is only useful if it’s accessible and well managed,” she says. “That intergenerational wealth transfer and unlocking it is really important.”
For those looking to understand estate planning, see Fortune‘s coverage on: what the first step in the process should be, how to ensure the process goes smoothly, why to steer clear of “fear based” planning, and why to think outside of the box when it comes to planning ahead.
