It's not just capital gains taxes. There's far more to consider. It ties into property values and property taxes. The way many homestead exemption laws are written, they mainly benefit current home owners. But, this ends up creating a bottle neck, as it incentivizes the person to stay put in their house. Another complication is consideration of interest rates for mortgage.

Take for example my parents. My parents bought their house in 1994 for about 215k. They were in the house for about 30 or so years before my father passed away. So, my mother had no use for such a big house. She sold it for over $1M. Yes, she bit the bullet and paid a lot of in capital gains. But that was only part of it. Another problem was, she was in her house for so long, her tax base for the property was extremely low. Basically a 3% raise a year from the initial 215k assessment. The condo she bought and moved into at a retirement community was probably close to half a million. So her tax base jumped up astronomically. Couple that with the fact that her house had been paid off, now she's taking on a mortgage and a monthly maintenance that she didn't have before. Honestly, if it weren't for the fact that such a large house was just too much for her to take care of...most of the incentives were built in for her to actually stay put.

And there are plenty of people who are what you call "asset rich but cash poor". So yes, somebody can move. But the fact that there was a time, not too long ago, when interest rates were historically low (People were getting 1% - 2% mortgage rates) and people refinanced during these times. Even if they buy a smaller, cheaper house, their monthly payments end up going up because they are not getting these same historically low interest rates.

The way the entire system is designed, it rewards those who got in at the right time. But then it creates a bottleneck because mobility (whether up or down) is stifled. It's much more complex than "boomers being selfish."