Don't count on the 'silver tsunami' for housing inventory surge

"The inheritance trend is especially pronounced in California, where tax policies encourage families to keep homes rather than sell them, according to the report. State rules cap property tax increases at 2% per year. They also allow children and grandchildren to inherit tax benefits on the first $1 million of real estate value if the home becomes a primary residence. Nearly 60,000 California homes were inherited in 2025, accounting for 18% of all property transfers in the state. For the first time, inherited homes more than doubled the number of new homes sold. Cotality said these incentives create a significant financial incentive for beneficiaries to hold onto the inherited home and use it as a primary residence effectively locking potential supply out of the open market."

"The muted impact of inheritances on supply stems partly from how baby boomers behave compared with earlier generations. Boomers own a historically large share of homes and are less likely to move or downsize as they age, the report said. People born in 1948 owned 50% more homes at age 65 than those born a decade earlier, according to U.S. Census Bureau data analyzed by Cotality. Older cohorts were also more likely to leave their homes between ages 65 and 75. More than 22% of homeowners born in 1938 moved during that decade, compared with just 17% of those born in 1946."

Inheritance-driven housing transfers, particularly in California, are returning far fewer homes to the market than expected because tax rules create strong incentives to retain properties. California caps property tax increases at 2% and permits children and grandchildren to inherit tax benefits on the first $1 million if the home becomes a primary residence. Nearly 60,000 homes were inherited in 2025, representing 18% of transfers, and inherited homes outpaced new-home sales. Baby Boomers hold a historically large share of housing and are less likely to move or downsize, slowing turnover. Demographic shifts alone will not solve affordability problems.

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