Maggie Hildebrand's first apartment in Toronto had a kitchen, a dining table, a workspace and a bed – all in the same 300-square-foot room.
It was a decent home at first, close enough to her job downtown and with all the bare necessities for daily living.
But it didn't take long for the 28-year-old to feel boxed-in. It was so isolating in that tiny space, she told the BBC. It definitely feels like it's just somewhere to put worker bees during the night.
Ms. Hildebrand lived in one of the city's micro-condos, a once rare sight in Canadian real estate that has become ubiquitous in the last decade thanks to fast-growing, high-rise developments in major cities like Toronto and Vancouver.
But - as Canada's condo market sinks to lows not seen in decades due to a series of market pressures - the value of these micro units is cratering faster than any others.
The condo market is experiencing a downturn not seen since the 1980s, with thousands of move-in-ready units sitting empty and unsold across Toronto and its surrounding regions. Over the last year, an unprecedented 18 condo projects were cancelled in the city, with experts expecting that number will grow as demand continues to plummet.
The downturn has reignited debate over whether developers catered too much to real estate investors by building smaller, more affordable units that minimised square footage to keep prices low in areas where land values are high, and which were often designed to be rented out or flipped for profit.
Investors own the majority of condos under 600 square feet in Toronto, according to national database Statistics Canada. Construction of these small units skyrocketed in 2016, and they now make up 38% of condos built in the city, compared with only 7.7% before.
These units have not exploded in the same way in the US, where they represent a very small share of the market, though Nadia Evangelou, a Senior Economist at the National Association of Realtors, said their prevalence has roughly doubled over the past decade.
With so much inventory on the market in Canada, some micro-condos that had sold for half a million dollars a few years ago are now reselling for C$300,000 ($217,000; £163,000) or less – a price recently unthinkable in downtown Toronto, which is often cited as one of the most unaffordable cities in the world.
It's a race to the bottom getting these things sold, said Shaun Hildebrand, president of Urbanation. The condo slump is not unique to Toronto, with Vancouver experiencing a similar – albeit smaller – downturn since 2024.
Several factors are contributing to this decline, including an oversupply of units built to accommodate a surge in immigration that has since tapered off due to new caps on immigration policies. This dramatic reversal has led to over 60,000 new units completed in recent years for a demand that no longer exists.
Additionally, a rapid increase in prices followed by a rise in interest rates is quelling the market's growth, forcing some investors to sell at a loss. A freeze on foreign buyers is further complicating the landscape.
The fallout from the condo downturn could shift the market’s focus from investors to long-term residents and buyers. The growing availability of rental units means renters are finding better deals and improved living conditions. This significant change raises questions about future supply and demand in Canada’s housing market, as the nation faces an ongoing housing crisis amid changing public policy and shifting economic terrains.
