EXPERT INSIGHTS
Passing Wealth, Widening Gaps: The Role of Homeownership in the Great Wealth Transfer
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​​By: Linna Zhu & Amalie Zinn, Urban Institute
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Baby boomers are approaching retirement and end-of-life planning. These households hold more than half of our country’s wealth and are estimated to pass down $84 trillion worth of assets by 2045. Our new research suggests that what has been deemed the “Great Wealth Transfer” is likely to exacerbate racial wealth disparities and stagnate progress to close racial gaps in homeownership rates in California and across the nation.
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Research has made it clear that homeownership is a keyway to build wealth in the United States. But in light of the impending historic wealth transfer, we wanted to explore the relationship between homeownership and inheritance across demographics. Our research found that homeowners were more likely than renters to expect to leave an inheritance, even when holding constant differences in one’s socioeconomic position like financial wealth, student debt, and income. Specifically, we found that the odds of a homeowner expecting to leave an inheritance were 1.3 times that of a renter. And the relationship between homeownership status and inheritance was greater for Black and Hispanic households relative to white households. This is perhaps because housing wealth tends to make up a greater portion of total wealth for Black and Hispanic households than for white ones.
Clearing the Path for Condos: How California’s Construction Defect Laws Are Blocking Homeownership
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By: Muhammad Alameldin, UC Berkeley’s Terner Center for Housing Innovation
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California’s dream of affordable homeownership is slipping away, not just because of soaring prices, but due to an invisible barrier—outdated construction defect laws that are stifling the creation of affordable condos. Across most of the world, people have been able to live near jobs and amenities by owning instead of renting a unit in a multifamily dwelling—otherwise known as condominiums. Yet, in California, we have a serious problem: very few new multifamily homes are available for ownership.
In fact, last year, less than 3,000 new multifamily (5+ unit) homes were built for sale across the entire state. In 2005, San Diego alone built more condos than the entire state of California did last year. This drastic decline in condo construction is not just a reflection of market trends but a direct consequence of California’s outdated and overly punitive construction defect liability laws. These laws have created a legal environment where for-sale multifamily homes, especially condos, are almost guaranteed to face litigation, making it nearly impossible for developers to build them without significant financial risk.
Housing Affordability Improved in Minneapolis and Houston After Reforms
Updated regulations helped expand availability of homes, curbing rent growth and homelessness
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By: Linlin Liang and Kery Murakami, Pew Charitable Trusts' Housing Policy Initiative
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Hundreds of thousands of residents have been fleeing California since 2015, largely because of the cost of housing. But even with an exodus of 260,000 people in 2023 alone—among the most in the nation—the state is still facing high housing costs and homelessness fueled by a shortage of at least 881,000 homes.​
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And California is not alone. The U.S. as a whole is struggling with a record shortage of housing, caused in part by overly restrictive zoning codes that have prevented new housing development, even in areas with many jobs and transit stops, and raised rents. Over the past dozen years, housing underproduction has affected nearly 75% of the country’s metropolitan areas.
Several major cities, however, have bucked this trend. Research by The Pew Charitable Trusts indicates that Houston and Minneapolis added to their housing supply since their initial reform efforts in 1998 and 2009, respectively, by changing their local regulations to allow more town houses and apartments to be built. This, in turn, has helped these cities keep rent growth low, improving affordability.
California Real Estate Opportunities in an Age of Climate Change
By: Matthew E. Kahn, Provost Professor of Economics at USC and a Visiting Fellow at the Hoover Institution
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California real estate both contributes to the climate change challenge and is directly impacted by the physical risks caused by climate change. Real estate construction and operation uses fossil fuels. For decades, California’s leaders have introduced legislation to decarbonize this sector. Such mitigation efforts have focused on decarbonizing the power grid, introducing energy efficiency standards, incentivizing solar roof installation and the electrification of homes. My work on “solar homes” took MLS data at the home level and asked the following question; “for two homes in the same California zip code that have roughly similar structure attributes such as bedrooms and bathrooms, what is the price premium for the home that has solar panels?” Back in 2013, our estimate was roughly a 3% increase in the sales price.
California’s real estate has always faced local risks such as earthquakes, drought and recession. Climate change poses new physical risks as the likelihood of extreme heat, wildfires and floods has increased. Insurers have responded to rising risks by raising premiums on properties but regulatory price ceilings limit their ability to sharply increase rates. In recent months, many California real estate owners (including myself, and my mother in-law) have been dropped by our insurance providers.
My recent adaptation research focuses on how to unleash market competition to improve the resilience of the real estate sector so that extreme weather events cause less real estate damage.
