‘Micro condos’: These are some of the cheapest units for sale in Toronto
A look at some of the cheapest condos for sale in Toronto right now amid a slumping market.
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Multiple condominium units are selling for less than $400,000 in Toronto right now, many with less than 500 square feet of space. But what draws someone to a unit like this, and how could it help a first-time home buyer get into the market?
Realtor Carla Mansur says so-called ‘micro condos’ are a “traveller’s dream.” (Realtor.com/Carla Mansur)
“I find with a studio condo unit this size, our target buyers will be anyone looking to be in Toronto off and on,” Mansur told CTV News Toronto. “It’s perfect for a snowbird who is looking to live the city life in the summertime, then travel elsewhere for the winter.” (Realtor.com/Carla Mansur)
Mansur says units like this one, located along Richardson St. near Queens Quay E and selling for $374,900, typically come with several free amenities for owners, but admits that an influx of condos is causing challenges for the housing market. (Realtor.com/Carla Mansur)
“We have an influx of condos right now and due to the high mortgage rates and people wanting space, (it can be) a challenge to get it sold. The rental income yield is also a lot lower than historically. That reduces profitability and dampens demand from investors.” (Realtor.com/Carla Mansur)
Professor Dawn Parker, with the University of Waterloo School of Planning, agrees. “The falloff of condominium sales is no surprise. Seven to 10 years ago, there was an entire international industry around financing high-rise condos, the majority of which had very small units and were sold to investors.”
“When talking about demand, we’re talking about pre-purchase investor demand, because to be constructed you usually need to sell off about 80 per cent of units to investors. Investors buy them either to rent them out themselves or with the anticipation that they would be able to resell them, so that’s what was driving all these new builds for many, many years,” said Parker. (Realtor.com/Hafsa Majeed)
Despite the drop in investor interest in smaller condo units, realtor Faizel Bhabha says there are several groups that stand to benefit from purchasing a ‘micro condo,’ like families with students and seniors. (Realtor.com/Hafsa Majeed)
“For someone approaching retirement or looking to reduce monthly living expenses, this cozy apartment offers a low-cost alternative to renting. It provides peace of mind, affordability, and convenience—all in one package,” Bhabha said of this 453 sq. ft. unit on Gloucester St. near Yonge St., selling for $319,000. (Realtor.com/Hafsa Majeed)
“Parents seeking a stable housing solution for their child attending university or college will appreciate the fixed monthly cost for the next three to four years,” he added. (Realtor.com/Hafsa Majeed)
“Micro condos can be appealing for various reasons, including affordability, location, and the growing trend toward minimalism,” University of Alberta School of Business professor Murtaza Haider told CTV News Toronto. (Realtor.com/Union Capital Realty)
“This summer, I observed this trend even more prevalent in Europe, particularly in Amsterdam. Many buyers today prioritize being close to work or vibrant neighbourhoods, and these smaller units often fit the bill. Moreover, for first-time homebuyers or those looking to downsize, the investment potential of a micro condo can be worth considering, especially in a competitive market.” (Realtor.com/Union Capital Realty)
Haider adds that a condo like this one on sale for $329,900 on Spadina Ave. near Bloor St. W is appealing to the growing number of single-person households in Canada. “If you look at Canada’s demographics, you see a significant increase in single-person households. That’s one of the fastest growing cohorts in (the country), and they can live in a smaller space.” (Realtor.com/Union Capital Realty)
A Canada Mortgage and Housing Corporation (CMHC) report released Wednesday highlighted how condo sales are dwindling, inventories are rising, and a growing number of investors are experiencing financial distress due to the falling costs of condominiums.
“There was a confluence two or three years ago of high interest rates, high construction costs, and high land values, which contributed to the spate of condo project cancellations,” said Parker. “That oversupply combined with other financial factors made them (condos) unprofitable, because they were oversaturated for the small demographic that could live in them.”
Haider added that those high costs led to the ‘micro condos’ we’re seeing in buildings today. “The (condo) size is a reflection of very high land prices, because then you want to build more units, but you want to squeeze them in so that you can justify paying that high price for land. These micro units will only exist in places where land prices are exorbitantly high.” (Realtor.com/Carla Mansur)
