Why Home Inheritance In CA Is Twice As Common As In The Rest Of The U.S.: Report

Home inheritance is twice as common in the high-priced California housing market as it is in the rest of the country, according to a recent report from The Wall Street Journal.

Roughly 18 percent of property transfers last year in California — or almost 60,000 homes — were via inheritance, the newspaper reported, citing an analysis from data firm Cotality. That number is up 6 percent since 2019 and is about twice the national percentage, according to the Journal.

In a state where the median house sale price was almost $900,000 last year, the high rate of inherited homes reflects years of rising real estate prices and specific tax policies, the newspaper reported.

“We’re in this negative feedback loop,” Ken DeLeon, founder of Palo Alto’s DeLeon Realty, told the Journal.

In 1978, voters passed Proposition 13 to generally cap property tax hikes at 2 percent per year based on the last purchase price, according to the Journal, meaning a longtime owner today might pay 10 times less than their new neighbor, although changes in 2021 limit the circumstances in which heirs are able to keep an inherited home's low rate, encouraging some to sell.

Read more from The Wall Street Journal.