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- calendar_today November 2, 2026
Toronto Condo Market Faces Diverging Trends
The Toronto condo market has experienced a notable downturn in the past year, with smaller units seeing significant price and demand drops. In contrast, larger condos have maintained or even increased their value, according to a recent analysis by real estate platform Wahi.
Small Condos Losing Value and Demand
Wahi’s study, which compares median condo prices from 2020 to 2026, reveals that one-bedroom condo prices have fallen by 14 percent, reaching a projected median of $480,000 by 2026. The decline in price mirrors a sharp 39 percent decrease in sales for these units during the same period. Contributing factors include an oversupply of small condos, declining demand, and increasingly undesirable layouts.
Larger Units Outperform the Market
In contrast, larger units have fared much better. Two-bedroom condos experienced a modest two percent price increase, bringing the median price to $630,000. Three-bedroom condos saw a significant 13 percent rise, with prices reaching $700,000. The strongest appreciation was found in units with four or more bedrooms, which saw a 15 percent increase to $715,000.
Factors Behind the Value Gap
Ryan McLaughlin, an economist at Wahi, attributes the disparity to both supply and demand elements. "Cities like Toronto and Vancouver had an unprecedented boom in small unit construction post-pandemic, leading to an abundance of completed small condos," McLaughlin explained. While new supply for larger units remained limited, demand for smaller units decreased, exacerbated by tighter immigration policies. As a result, owners and investors are struggling to rent or sell these smaller units, despite reducing prices.
Design Challenges Plague Small Condos
Another key issue is the quality of condo layouts. The rush to meet demand after the pandemic led developers to prioritize quantity, often at the expense of space and liveability. Many small condos feature awkward configurations, such as extremely narrow kitchens or unconventional room shapes, making them less attractive to buyers. "There’s a consensus that the market overbuilt studios and one-bedrooms, some of which are considered nearly unlivable," said McLaughlin.
First-Time Buyers Shift Preferences
During the 2022 market peak, many first-time buyers opted for small units to establish a foothold in real estate. However, growing awareness of these units’ limitations has prompted many to wait and save for more spacious homes. Cheaper prices alone are not enough to entice buyers, as transaction costs and long-term liveability concerns outweigh potential savings. "Now that the downsides of these units are clearer, it’s difficult for buyers to justify the investment," McLaughlin noted.
Implications for Developers and Future Trends
The surplus of unsold small condos may serve as a wake-up call for developers. McLaughlin suggests that diversifying unit types will better align with buyer preferences. However, he notes that construction activity has slowed significantly, impacting both small and large units. "Developers are holding back, and starts are at zero," he said. "The hope is that the next building boom will produce more variety in condo offerings."
Source: nowtoronto.com.
