The Toronto housing market is taking interesting turns during the pandemic, with the influx of micro condos for sale being one of them.
A micro condo usually has 500 square feet of space or less, which pre-pandemic might have worked if you simply used your apartment to sleep in to then head out for the day. But with more people needing to work from home, the limited space is less desirable or manageable.
“If this trend continues into the future it suggests that we may end up seeing more downward pressure on very small condos while larger units may end up performing better,” John Pasalis, President of Realosophy, said in the report.
The report also points out that the trend is noteworthy because small condos make up a “significant” portion of the new condo supply so if there’s more inventory of small condos from new condo competitions it could “put even more downward pressure on prices.”
“The light blue shows the MOI by unit size in October 2019. We can see that smaller units generally had the lowest level of inventory, and inventory levels gradually increased as units got larger – a common trend since larger units also tend to be more expensive,” Pasalis said.
But in 2020, there’s a different pattern as the oversupplied units in the condo market are units that are smaller than 600 square feet.
According to Pasalis, these units are more oversupplied and harder to sell than units that are over 2,000 square feet in size which tend to be in the luxury segment.
Overall in Toronto, the rental marketing is seeing a downward trend as vacancy rates climbed from o.8% in the third quarter of 2019 to 2.4% in the third quarter of 2020.
This pushed the average rents in the GTA down 5.8% while average rents in the former city of Toronto were down 9.3%.
And, when looking at the condo rental market, available inventory continued to climb in October to 12,219 units compared to just 3,941 a year earlier.
However, the market for family-sized homes is still booming in the pandemic. The reason can be attributed to the fact that high earners haven’t been as affected by the pandemic and therefore, can still afford a home during this time.
As the GTA housing market continues to shift and change during the pandemic it’s good to stay up-to-date on what’s a solid investment and what’s best to shy away from at this time.