For years, microcondos were the stuff of urban legend — or at least, urban density. In places like Hong Kong, Tokyo, and Paris, where land is scarce and sky-high prices are the norm, microcondos — some barely 100 square feet — have been a necessary reality. In Hong Kong, the smallest of these are dubbed “coffin homes.”

Toronto never quite went that small, but we got close. In the last 10 to 15 years, our city embraced the microcondo in a big way. Think 263 square feet of living space. Not a coffin, per se, but definitely not for the claustrophobic.

The Microcondo Moment

At first, microcondos were dismissed as impractical — a quirky novelty destined to flop. Banks were skeptical, too. Anything under 500 sq ft was considered “high risk.” Some lenders refused to finance them at all, while others required 20% down and an extra layer of scrutiny. The concern? That no one would ever want to buy one.

But they did.

Buyers came, and so did the investors. Developers realized they could squeeze more units (and more profits) into each building. Investors loved them for their low cost and high rental potential, especially in central locations. And renters — particularly students, young professionals, and newcomers to the city — were willing to trade space for affordability.

And so, the microcondo found its niche.

Why the Decline?

Fast forward to today, and microcondos are some of the least saleable condos on the market. What changed?

1. The Investor Exodus

The biggest shift? Fewer investors. A lot fewer. Here’s why:

• Tenant/Landlord Board delays: It can take months to resolve tenant disputes. Landlords are finding the risks outweigh the rewards.

• Falling rents: While prices are down, so are rental incomes. The math isn’t working for many investors.

• Tenant complications: Selling a tenanted microcondo is tough — especially when the rent is below market value and the Tenant Landlord Board is not working well.

• Shifting demographics: Fewer international students, less immigration, and more young professionals working from home — all factors that have reduced demand for ultra-small living.

2. End Users Are In, Investors Are Out

Today’s buyers are more likely to be end users — people looking for a home, not an investment. And most people don’t want to live long-term in a 300-something sq ft space, especially if it’s also their office.

3. Too Much Supply

We’ve had a flood of microcondos hit the market recently thanks to pre-construction completions. Combine that with a sharp drop in investor demand, and it’s a recipe for stagnation.

So, Are Microcondos Dead?

Not quite. The microcondo may be down, but it’s not out.

Right now, we’re in a period of investor hesitation. But markets change. If prices remain low and rents start to climb again, investors may return. In fact, some savvy buyers are already testing the waters, scooping up microcondos while the market is soft — betting on future demand in a city that remains one of North America’s most expensive.

What the Future Holds

That said, the pendulum may be swinging toward larger, more livable condos. There’s growing political and social pressure to build housing that works for families — not just solo renters. Two-bedroom condos, for instance, are gaining popularity as they appeal to actual residents rather than investors. And as the price gap between houses and condos widens, two-bedroom units are starting to look like the new starter home.

Microcondos, by contrast, are a product built for a specific market: a dense, expensive city with a deep pool of renters and a healthy appetite for investment real estate.

In short, microcondos thrive when:

• Prices are high

• Rental demand is strong

• Investors are active

Right now, we’ve only got one of those boxes checked.