Joint Center for Housing Studies Harvard University

This paper examines intergenerational wealth transfer and its impact on housing. It synthesizes previous studies and findings through three perspectives: the sociological concerns, economists’ concerns, and the housing industry’s concerns. Substantial evidence is found that intergenerational wealth transfer contributes to the existing and growing inequality in wealth distribution. A new demography-based approach is developed to estimate the size of bequests vs. lifecycle savings. As life-cycle savings may only contribute about 34.5 percent to the total wealth, bequests and inter vivos transfers appear to be the dominant components of accumulated wealth, and the size of bequests alone could potentially be as high as 40.5 percent of the total wealth. While all recipients of transferred wealth from parents have achieved much higher homeownership rates regardless of their age, income, and race/ethnicity, whites are twice as likely to receive wealth transfer than minorities, and low-income people are less likely to receive wealth transfer. Children of renter parents lagged behind those of homeowners in homeownership even after they became adults between 25 and 42 years old.