For the last 20 years the downtown landscape of Toronto was a sea of cranes representing the condo building boom. The strong desire to live downtown drove prices for apartment style units higher and who could blame them? Living in the hustle and bustle of downtown you have it all at your doorstep, fantastic restaurants, concerts, festivals, sports venues, bars and all that social interaction and energy. Now, all that has virtually disappeared with the onset of the pandemic so, does it makes sense to live in a small condo when you can’t enjoy all the benefits of living downtown?
The Financial Post reported that demand is declining for small condos or "micro-condos" in particular. Sales of units sized 500 square feet or less were down 20 per cent, year over year, in September of 2020.
The smaller one bedroom units were prime for investors (Pre-COVID), these condos were the hottest on the market. Investors picked them up because they were the only form of housing under $500,000 available in Toronto and they could charge high rents for prime locations in the downtown core.
Today, the world of micro-condos is very different. Micro-condo owners are struggling to sell and rent their units for a few reasons.
The idea of living and working in a 500 sqft. condo without access to the building amenities gym, party room or rooftop patio just isn’t desirable.
Other reasons include — recent immigrants and students. With the restrictions imposed by the pandemic, immigration has slowed and the majority of universities have moved to an online model.
This declining demand for small condos means that prices are down and for the first time in along time, the buyers are in control of this segment. Units are flooding the market and sitting longer on the market than ever before.
This does pose a silver lining as it is an opportunity for first time buyers who are renting and looking to getting into market. Agents have reported lower sales and even bully offers below asking price. If you are the selling side of this situation, however, and you are are looking to sell your small condo for larger space and greener pastures outside the city, it may be a tough go … for now.