“For years, analysts have held out hope that the aging Baby Boomer generation would trigger the ‘Silver Tsunami’ — a massive wave of homes unlocked and returned to the market,” the report stated. “However, new data suggests the Tsunami may, instead, hit the beach as a soft, rolling wave.”
California’s tax incentives lock in homes
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.”
Boomers hold more homes and stay put
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.
“Aging in place slows the natural cycle of downsizing, moving in with family and ultimately passing homes to the next generation,” the report stated.
While inheritances can help individual families cope with high housing costs, data suggests demographic trends alone will not fix the broader affordability crisis.
“Policymakers hoping to improve affordability cannot count on demographic destiny to save the day,” the report said. “While inheritance can be a lifeline for some families coping with historically high housing costs, those waiting on inheritances to rebalance supply and demand are likely to be left out in the cold.
“If America wants supply, we must build it.”
