Inherited Homes Reach Record Share of Residential Transactions in 2025

Younger baby boomers are holding onto their houses longer and prefer to age in place, Cotality said.

A view of houses in a neighborhood in Los Angeles on July 5, 2022. Frederic Brown/AFP via Getty Images

A record 340,000 homes were transferred from owners to heirs in the 12-month period ending August 2025, according to a new report by property analytics firm Cotality.

Inherited homes accounted for an all-time high of 7.4 percent of all residential real estate transactions during that time frame, with California totaling nearly 18 percent of all homes passed to beneficiaries, Cotality reported on Jan. 19. Nearly 60,000 homes in the Golden State were handed down to beneficiaries, who benefit from favorable property tax laws on inherited properties.

California’s Proposition 13, passed in 1978 and amended eight years later to include inherited residences, prohibits tax increases greater than 2 percent per year for primary residences that are continuously occupied. The mandate could stifle a potential supply of for-sale inventory in the housing market since beneficiaries are incentivized to keep inherited properties, Cotality noted.

“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,” Cotality’s data analysts wrote.

According to the Board of Governors of the Federal Reserve System, the majority of wealth for baby boomers is held in real estate assets, excluding high-net-worth families. For many baby boomers, the equity in their homes represents the largest portion of their estate to be passed on to beneficiaries.

“Baby boomers are holding the cards in the real estate market,” said Jessica Lautz, deputy chief economist and vice president of research for the National Association of Realtors, in a statement. “They have earned a tremendous amount of housing equity.”

Younger baby boomers are holding onto their houses longer and prefer to age in place, Cotality added. Nearly one-quarter of homeowners born in 1938 left their residences between the ages of 65 and 75, while just 17 percent of homeowners born after 1946 left their residences in that same 10-year age span.

Aging in place—staying in the longtime family home rather than moving into a retirement home, managed care, or skilled nursing facility—affects housing dynamics by prohibiting a massive source of potential resale inventory.

“Aging in place slows the natural cycle of downsizing,” Cotality said. “This delays the long-predicted wave of housing supply from arriving on the open market, and in many cases, those homes will skip the open market entirely.”

According to a 2025 report by Clever Real Estate, nearly two-thirds of baby boomers say they have no plans to ever list their homes for sale, meaning new inventory must be built to meet demand.

Joe Seydl, senior markets economist, and Audrey Weiss, global investment strategist, for JPMorgan Private Bank noted that the current housing shortage of approximately 2.8 million homes could take as long as a decade to resolve.

“The United States has faced a structural housing deficit for over a decade,” the JPMorgan report said. “While new construction has picked up, it’s not enough to close the gap. The backlog is so large that it will take years to unwind.”