Toronto’s smallest condos are taking the biggest hit

A new report from Wahi and Real Property Solutions, an appraisal management company, reveals that the Greater Toronto Area’s smallest condos have experienced the steepest declines in value over the past five years, with micro condos depreciating at nearly twice the rate of slightly larger units.

Between 2020 and 2025, the average appraised value per square foot of condos measuring less than 500 square feet fell 12.2%. By comparison, units between 500 and 700 square feet declined 6.2%.

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It’s a significant reversal for a segment of the market that was once particularly attractive to investors.

The research, which examined condo values across five size categories, also found that the smallest units were among the first to show signs of trouble.

Micro condo values began declining on a year-over-year basis in 2023, well before falling prices became widespread across the broader condo market.

By 2025, the average value of these units had dropped $152 per square foot compared to the previous year, marking their steepest annual decline over the five-year period.

So why are Toronto’s smallest condos taking the biggest hit? Much of it has to do with changing demand. For years, investors played a significant role in Toronto’s condo market, purchasing smaller units to rent out. With purpose-built rental construction lagging for decades, condos effectively became an important source of rental housing.

But when interest rates began rising in early 2022, the financial appeal of owning investment properties diminished. As investors retreated, demand for small condos weakened, leaving the market with an abundance of units designed primarily for investors rather than people looking for a place to call home.

With prices falling across the condo market, buyers who remain active may now be able to afford larger units that were previously beyond their budgets.

The shift in demand is taking place against a backdrop of widespread weakness in the GTA housing market. In September, condos sold below asking in 98% of GTA neighbourhoods where at least five condo transactions occurred, highlighting the negotiating power buyers currently hold.

For prospective buyers, particularly those looking to enter the market, falling prices could present opportunities to purchase more space for less money than in previous years.

Benjy Katchen is CEO of Wahi, a digital real estate platform servicing both buyers and sellers. Visit www.wahi.com.

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