“For years, analysts have held out hope that the aging baby boom generation would trigger the ‘Silver Tsunami’ – a massive wave of homes being unlocked and coming back onto the market,” the paper said. report declared. “However, new data indicate that the Tsunami may instead hit the beach as a gentle, rolling wave.”
California’s tax breaks keep homes locked up
The inheritance trend is especially pronounced in California, where tax policy encourages families to keep their homes rather than sell them, the report said.
State rules limit property tax increases to 2% per year. They also offer children and grandchildren the opportunity to inherit tax benefits on the first $1 million of property value if the home becomes a primary residence.
In 2025, nearly 60,000 California homes were inherited, accounting for 18% of all property transfers in the state. For the first time, inherited homes have more than doubled the number of new homes sold.
Cotality said these incentives “create a significant financial incentive for beneficiaries to retain the inherited home and use it as their primary residence – effectively keeping the potential supply out of the open market.”
Boomers have more homes and are staying put
The moderate impact of inheritances on supply partly stems from the way baby boomers behave compared to previous generations.
Boomers historically own a 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 ten years earlier. US Census Bureau data analyzed by Cotality.
Older cohorts were also more likely to leave their homes between the ages of 65 and 75. More than 22% of homeowners born in 1938 moved in that decade, compared to 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 said.
While inheritances can help individual families cope with high housing costs, data suggests that demographic trends alone cannot solve the broader affordability crisis.
“Policymakers seeking to improve affordability cannot count on demographic fate to be the solution,” the report said. “While an inheritance could be a lifeline for some families facing historically high housing costs, those waiting for an inheritance to rebalance supply and demand are likely to be left out in the cold.
“If America wants supply, we have to build it up.”
