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By Hugh Cameron
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The share of Americans who acquire their homes through inheritance is growing, reflecting affordability pressures for buyers as well as how regional regulations can incentivize real estate “hand-me-downs.”
According to a recent report from the real estate intelligence firm Cotality, a record 18 percent of all property transfers in California were through inheritance in 2025, up from 12.6 percent in 2019 and more than double the nationwide average. And while the Golden State leads in this regard, Cotality found that inherited homes as a share of total property transfers are on the rise nationwide.
Why It Matters
Affordability challenges, particularly for first-time buyers, have intensified in recent years amid rising house prices and other ancillary costs, discouraging many buyers and leading to a dearth of seller markets.
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The inheritance trend, Cotality notes, could support past predictions of a “Silver Tsunami”—a wave of new homes hitting the market and freeing up supply. However, it said that this surge in “hand-me-downs” has coincided with homeowners holding onto their properties for longer, likely leaving many prospective buyers on the sidelines for years to come.
What To Know
Cotality found that the rise in inherited homes as a share of property transfers extends beyond California. A total of 340,000 properties were inherited in the United States in 2025, representing 7.4 percent of all property transfers, an all-time high and up from 4.2 percent in 2019.
In California, inherited properties now outnumber new-home sales by more than two to one, a fact Cotality said could be attributed to the state’s property tax rules.
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As well as having a relatively low property tax rate compared to the rest of the nation, California law also limits how quickly these can rise. Annual increases are capped at 2 percent, regardless of whether the market price has soared, meaning longtime owners often pay taxes based on valuations set years earlier.
And the state allows this preferential treatment to be passed on to heirs, meaning homeowners are encouraged to transfer their properties to the next generation rather than navigate today's challenging seller’s market, and beneficiaries, in turn, are incentivized to hold onto the inherited home.
“It's clear that these laws 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 report reads.
What People Are Saying
Cotality writes: “Policymakers hoping to improve affordability cannot count on demographic destiny to save the day. 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.”
What Happens Next
With mortgage rates drifting downward and a recent string of encouraging economic data releases, some analysts believe the housing market may be on a positive trajectory compared to 2025. Still, most agree that this will hinge on the health of the broader economy, and that inventory issues and affordability pressures will likely remain significant challenges.
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