Decline of Micro-Condos: A Shift in Canada's Housing Market

Sat Jan 03 2026 22:51:36 GMT+0200 (Eastern European Standard Time)

Once sought after, Canada's micro-condos are losing their appeal as market pressures lead to significant price drops and rising inventory issues.

The rise of micro-condos in Canada has been overshadowed by a considerable downturn in the housing market. With thousands of units unsold and prices plummeting, former enthusiasts like Maggie Hildebrand reflect on the isolating experience of living in a 300-square-foot space. The market, predominantly serving real estate investors, now shows signs of decline, raising questions about the future of these compact living spaces and the broader implications for housing supply in major Canadian cities like Toronto and Vancouver.

Maggie Hildebrand's first apartment in Toronto encompassed a kitchen, dining table, workspace, and bed in a mere 300-square-foot room. Initially, it seemed adequate, ideally located near her job, but the confinement quickly felt stifling. It was so isolating in that tiny space, she shared. It definitely feels like it's just somewhere to put worker bees during the night.

Hildebrand's experience reflects the rapid rise and subsequent decline of micro-condos, which have proliferated in urban centers like Toronto and Vancouver. Once hailed for their affordability and innovation, these units now face an unprecedented drop in demand.

As Canada's condo market experiences a downturn not seen since the 1980s, the value of micro-condos is plummeting faster than that of larger units. An overwhelming inventory of unsold properties has contributed to a dramatic shift, evidenced by the cancellation of 18 projects in Toronto over the past year alone.

Experts highlight that developers may have excessively catered to real estate investors, flooding the market with smaller, more affordable units that prioritize profitability. In Toronto, condos under 600 square feet, which account for 38% of new constructions, have not gained traction in the U.S. market, where they represent a mere small fraction.

While some micro-condos previously sold for $500,000 are now reselling for $300,000 or less, the once-booming housing sector is facing challenges as immigration policies shift and potential buyers hesitate in a cooling market.

The situation allows renters like Hildebrand to explore larger living spaces at reasonable rates. Although the current downturn presents opportunities for some buyers, it raises concerns about the future of the housing market and whether the demand for micro-units will sustain amidst the changing dynamics.

As the Canadian housing market contemplates its path forward, the risk remains that low prices may not last, calling into question the stability of housing supply in the coming decade.