In theory, if your goals and chosen locale are not identical to your parents, you can sell their house for cash and use the cash to buy a house in your chosen locale.
In practice, a large percentage of the population are getting screwed because a.) their parents lost their home in the foreclosure crisis, the bank repossessed it, and it got sold to a private investor b.) their parents had inadequate savings and needed to take out a reverse mortgage, and most of the home equity goes to the bank by the time they die c.) their parents got divorced and their evil stepmother got the house or d.) their parents live in one of the many regions where housing prices are stagnant or declining but the kids need to live in an expensive region to have a job.
I think it is even simpler than that. According to wiki, life expectancy in USA is roughly 80 years. If the children are had at roughly 25-30 years, by the time property is inherited, children are 50-55 - age when they are expected to have grown their own children, not the best age to start a family. Under the same assumptions, grandchildren are 20-30, therefore at a good age to inherit the property. Yet, if we factor in fertility rate of 1.8, that's 3.25 grandchildren on average or 30% stake at the inheritance. More like mortgage deposit, rather than a place to live.
For an average person it is not reasonable to expect to inherit a property during age of settling down when that is most needed.
Your fertility rate math is off - it might be 3.25 grandchildren/grandparent, but each grandchild has 4 grandparents (barring edge-cases like incest or remarriage). If you account for property typically being owned by couples, it's only 2 grandcouples, but this is offset by your spouse having 2 grandcouples as well. As long as fertility rate < 2, wealth actually accumulates during inheritance.
Your comment about timing is right-on though: most couples are expected to have the house & kid before the grandparents die.
Don’t forget people who:
- don’t have parents
- are estranged from their parents
- would never accept anything from their parents, even after death
- whose parents never escaped poverty for long enough to buy property
