The American Dream promises the possibility of riches no matter who your are or where you come from — but to achieve the Californian Dream, family connections count for a lot.
Nearly 18% of all California property transfers last year — a record sum — were made through inheritance, according to an analysis by the real estate data firm Cotality. The news was first reported by the Wall Street Journal.
Inheritors enjoy huge financial and tax benefits, but leave many others on the housing market sidelines, faced with fewer options and higher prices.
Home prices across California Home prices across California remain unaffordable for a majority of residents. Justin – stock.adobe.com
Low supplies and sky-high prices make inheriting a home an especially precious opportunity. Jason – stock.adobe.com
The rate of family home hand-offs in California was roughly double the national share last year, at 8.8%.
Inherited homes in California totaled nearly 60,000 in 2025, according to the report, marking a high-point in Cotality’s data starting in 1995. It was also twice the number of new homes sold — a first in the Golden State.
Inheritance rates are rising nationwide, according to Cotality, but today’s seniors are holding onto the homes longer than ever.
The firm’s analysis attributed California’s particular uptick to favorable tax policies that reward beneficiaries and rising home prices that discourage moving house.
Jeff Fishman, a Los Angeles financial adviser, told the Journal that homeownership in California has become “a ’til-death-do-us-part scenario.”
More than 30% of recent home listings in California were priced at more than $1 million. Andrey Vlasov – stock.adobe.com
California’s property tax rules, in particular, incentivize homeowners to hold onto their properties until their death. The typical Californian homeowner stayed in their homes 17 years in 2024, according to Redfin data. That’s five years longer than the national median.
A constitutional amendment passed by the state in 1978, Proposition 13, drastically limited property taxes and reigned in annual hikes to a maximum of 2%. That low tax bill goes out the window once a home is sold, the Journal reported, meaning that a new buyer may pay 10 times more than their next-door neighbor who bought in the 1970s.
Rules on whether these low tax rates can be inherited were adjusted in 2021, but receiving a property from a parent or grandparent still offers young people the chance to live in a home far outside of their tax bracket. They can also sell for a generous payday that avoids pesky capital-gains taxes.
Californians earning the state’s median income are faced with home prices seven times higher. Unwind – stock.adobe.com
The passing down of a home would be substantial gift amid a wildly unaffordable time for the state.
More than 30% of recent home listings in California were priced at more than $1 million, according to a Realtor.com analysis. The state’s median listing price of $700,000 is more than seven times the median income.
Elderly California homeowners interested in aging in place have even less incentive to sell. High property values allow homeowners to reap financial benefits from mortgages or renting out their homes, rather than selling them outright.