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Analysts and housing experts this week balked at what some called California’s “landed gentry” system for passing property down to younger generations.

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Residents of the Golden State may feel like they have to be California Dreamin’ to afford a house in their pricey region. And that may be one reason many homeowners are passing their real estate assets down to the next generation after they pass on from this life.

Nearly one in five property transfers in the state last year — 18 percent, representing nearly 60,000 homes — were made through inheritances, data from Cotality reported on by The Wall Street Journal shows.

That share in inheritance transfers represents about twice the national level. It’s also a record for California, according to data going back at least to 1995.

Various factors, including years of sharply increasing home prices and tax policies, such as Proposition 13 — which keeps property taxes lower the longer a resident has been in their home — have contributed to California’s high inheritance rate. Descendants of a homeowner who passes away and inherits those properties also inherit that lower property tax bill under the law. They can similarly sell the property and keep the proceeds of the sale without having to pay capital gains taxes under California law.

The incentives for older generations to hold onto those properties until the bitter end have led to a very tight inventory market in the state, which makes it increasingly difficult for first-time buyers to enter the market, because of both supply and cost constraints.

Wild stat: “~18% of all property transfers in California last year were made through inheritance.” https://t.co/LPI84VU4Uh pic.twitter.com/oHzRbjVzOn

— Rick Palacios Jr. (@RickPalaciosJr) March 1, 2026

Analysts and other housing experts took to social media to respond to the report and its somewhat backwards implications about a state that has traditionally prided itself on its liberal reputation.

“Californians have a tendency to hold onto their homes until their dying breath, which restricts the housing supply because those homes never go on the open market,” Daryl Fairweather, chief economist for Redfin, said in a response to the report posted to X. “And it’s a huge benefit to heirs who to get inherit a million dollar home without having to work for it. Meanwhile, everyone else is struggling to earn enough money to be able to buy a home the normal way. When most people struggle to afford homeownership but some people get to inherit homes without really trying, we don’t have a housing market, we have a caste system defined by family wealth.”

Fairweather, as well as California YIMBY Senior Director of Legislation and Research M. Nolan Gray called out California laws surrounding property inheritance and their similarity to the landed gentry of generations long past.

“On the one hand, California identifies as the most progressive state,” Gray wrote on X. “On the other hand, it has created an untaxed, hereditary landed gentry that it costs seven figures to buy into on most of the state.”

Arpit Gupta, an associate professor of finance at the NYU Stern School of Business, also likened the policy to feudalism, the socio-economic system that emerged in Western Europe during the Middle Ages in which a landowner or lord granted a piece of land to subordinate vassals who, in return, pledged their loyalty to the lord.

“California has reinvented feudalism from first principles,” Gupta posted on X.

Email Lillian Dickerson

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