Real estate wealth is flowing to the next generation, giving some buyers a head start while leaving others behind
A massive $1 trillion wealth transfer is underway in Canada as baby boomers pass their assets, primarily real estate, down to their children.
The Chartered Professional Accountants of Canada estimates that between 2023 and 2026, millennials and Gen Xers will inherit a significant financial windfall, with much of that wealth coming from skyrocketing home values.
For many first-time homebuyers, this inheritance is providing a critical boost to homeownership. But at the same time, it is deepening economic inequality, widening the gap between those who receive family wealth and those who don’t.
Inheritance fuels housing market
Rising home values have massively increased the financial legacies left behind by baby boomers, especially in major cities like Toronto and Vancouver, where housing prices have surged. Even in provinces like Saskatchewan, inherited wealth is making its way back into the housing market, either through direct property transfers or financial gifts for down payments.
Keith Willoughby, dean of the Edwards School of Business at the University of Saskatchewan, warns that this trend could add even more pressure to Canada’s already tight housing market.
“We’re talking about a trillion-dollar tsunami that is about to hit this nation, which is unparalleled in our history,” he told CBC News.
Because housing supply remains limited, the influx of inherited money could push home prices even higher.
"Assuming there's no increase in the supply of homes, the supply of cottages, the supply of vehicles and the like, you're actually going to increase the equilibrium price," Willoughby explained.
Unlike many other G7 countries, Canada does not tax inheritances, leaving this massive wealth shift largely untaxed beyond capital gains.
Willoughby believes that Canada should at least study how other countries handle inheritance taxation, especially as wealth inequality continues to grow.
"For generations we have hung our hat on this notion that the CRA is going to tax income, not wealth, and until the CRA changes that tune or the government changes that perspective, I think we are a long way away from an inheritance tax," he said.
More first-time buyers relying on family gifts
As home prices continue to climb, more first-time buyers are turning to their families for help. A CIBC report found that in 2024, 31% of first-time homebuyers received financial assistance from their families, up from 20% in 2015.
Not only is this becoming more common, but the amount of money being gifted is increasing. The average financial gift for a home purchase reached $115,000 in 2024, up from $66,000 in 2019.
While this financial support is helping some buyers enter the market, it’s also exacerbating wealth inequality. A 2023 Statistics Canada study revealed that millennials whose parents were homeowners were twice as likely to become homeowners themselves compared to those whose parents never owned property.
Willoughby noted that this trend challenges traditional ideas of financial success.
"I think it creates a disturbance within society, because I think we're almost hardwired in our DNA to link cause and effect. That 'If I do X, I should get Y,'" he said. "You could be wealthy or wealthier by working in a productive profession, or you could be wealthy or wealthier by simply being the luck of the draw."
Read more: The implications of generational wealth on the mortgage market
For newcomers who didn’t have the opportunity to buy property decades ago and Indigenous communities historically barred from homeownership, the growing wealth divide is even more pronounced.
Jason Bird, a professor at First Nations University of Canada, pointed out that many Indigenous families simply don’t have generational wealth to pass down.
“We don’t even have a boomer generation to pass stuff down,” Bird said. “Most of that generation is already gone, and they were never fully included in the economy.”
He also noted that wealth is often defined differently in Indigenous communities.
"Wealth is kind of judged differently in Indigenous communities,” Birsd added. “Really, the ability to share more is actually considered wealth. The more you have, the more you can give, and the more you can give, the more it helps numerous people."
Farm inheritances
In Saskatchewan, the impact of inheritance is particularly visible in farmland values. According to Statistics Canada, the average price per acre of farmland and buildings has nearly doubled since 2016.
For some families, this has sparked tough decisions. Should they sell the farm or pass it down to the next generation?
Wealth advisor Donovan Tofin, who works with farming families, says the conversation around farm inheritance has shifted dramatically.
"Looking back at my career in the '80s and '90s, sitting around the table with the family it was basically, well, which one of you poor souls got to stay in farming?" Tofin told CBC. "Today it's the opposite, where the kids know there's a lot of wealth. They're not sure what the number is, but they know there's significant wealth there."
Read next: Canadian farmers/US housing mortgage collapse similarities 'scary'
With inheritances growing, some Canadians are redistributing their newfound wealth through donations and philanthropy.
Donna Ziegler, executive director of the South Saskatchewan Community Foundation, has helped turn agricultural wealth into charitable giving, setting up a property holding company that donates rental income from farmland to local charities.
Others, like University of Saskatchewan medical student Jess Klassen, are taking personal steps to donate part of their inheritance.
After receiving a $300,000 inheritance, Klassen joined Resource Movement, an organization that helps individuals donate wealth effectively.
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