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Toronto's tiny apartments lose value amid housing glut
Once a rare sight in Canadian real estate, micro-condos-units under 300 square feet-have flooded Toronto's market over the past decade. Now, their value is plummeting faster than any other housing type as the city grapples with an unprecedented condo downturn.
From necessity to oversupply
Maggie Hildebrand, 28, moved into a 300-square-foot micro-condo in Toronto three years ago. The unit, which combined her kitchen, workspace, and bed in a single room, initially met her needs-close to downtown and affordable. But the isolation soon wore on her.
"It was so isolating in that tiny space. It definitely feels like it's just somewhere to put worker bees during the night."
Maggie Hildebrand, former micro-condo resident
Her experience reflects a broader trend. Micro-condos, once a niche product, now account for 38% of Toronto's condo construction, up from just 7.7% before 2016. Investors, not end-users, own the majority of units under 600 square feet, according to Statistics Canada.
Market in freefall
Canada's condo market is experiencing its worst slump since the 1980s. In Toronto alone, 18 projects were canceled last year, and thousands of completed units remain unsold. Prices for micro-condos have cratered, with some reselling for C$300,000 ($217,000; £163,000)-less than half their value from just a few years ago.
"It's a race to the bottom getting these things sold."
Shaun Hildebrand, president of Urbanation
Vancouver faces a similar, though smaller, downturn. Experts cite two main drivers: oversupply and shifting economic conditions.
Why the crash?
First, developers overbuilt. Toronto added thousands of units in recent years to meet surging demand fueled by immigration. But Canada's population growth stalled in 2025 after the government capped new arrivals to ease the housing crisis. The Bank of Montreal reported the largest annual population decline since the 1940s (excluding the 2020 pandemic), leaving 60,000 newly built units without buyers.
Second, rising interest rates destabilized the market. Canada's central bank slashed rates during the pandemic, encouraging investors to bet on real estate. When rates climbed to combat inflation, those bets soured. Some buyers are now selling pre-construction units at steep losses, while others hesitate to enter the market.
A 2022 ban on foreign buyers-intended to improve affordability-may have also dampened demand, though foreign ownership accounts for just 2% to 6% of condos.
Winners and losers
Renters like Maggie Hildebrand are benefiting. She recently moved into a 700-square-foot, one-bedroom apartment with a backyard for just C$200 more per month than her micro-condo. "My birthday is tomorrow, and I'm having a party and hosting 25 people," she said. "A year ago, that was not possible."
First-time buyers are also finding opportunities. Alex Cruz, a Toronto real estate agent, noted that bargain hunters are snapping up smaller units. "If there is a good deal per square foot, people will buy it," he said.
But the downturn could worsen Canada's housing crisis. With thousands of units canceled or delayed, fewer homes will enter the market this decade. Shaun Hildebrand warned that condos, a key source of supply in major cities, may become scarcer.
What's next?
Developers are rethinking their approach. "We've learned our lesson here," Shaun Hildebrand said. While micro-condos won't disappear-affordability remains a priority-they'll likely shrink as a share of new construction. The focus may shift toward long-term residents rather than short-term investors.
Prime Minister Mark Carney has pledged to double homebuilding rates over the next decade. But with construction slowing, experts warn that the current low prices may not last. "The question now is how long do we stay here, and what are the implications going to be for the housing supply in the next decade?" Hildebrand asked.
