Studio apartments under 500 square feet have seen the biggest effect from the slowdown in Toronto and Vancouver.Carlos Osorio/Reuters
While the market for condos of all sorts is depressed, it is the smallest condominiums where prices have fallen the farthest and the fastest. And there are few signs that a bottom is in sight.
Data collected by real estate company Wahi shows that studio apartments under 500 square feet have been hardest hit by the real estate slowdown in Toronto and Vancouver. In Vancouver, prices had continued to grow until 2024, but there was a sharp drop in 2025, with prices per square foot sliding $382, or 24 per cent lower. In Toronto, prices have been falling since 2022, and units in 2025 were selling at prices per square foot 28 per cent below their peak in 2022, a decrease of $379 per square foot.
But even with condo sales having dropped over the past five years, realtors and builders say that, priced right, these small units can still sell. It’s a thesis that will be tested in the coming months.
“Many homes are not thought of as financial assets,” said Ryan McLaughlin, economist with Wahi. “[But] these studios are more ‘financialized.’ That’s why the builders were excited about them too. On a per square foot basis, these units were the most profitable thing to build.”
The era of the shoebox condo is over
When rents were rising, studio apartments were very attractive to investors who wanted to be landlords. But studio rental rates have fallen fast, undermining the logic for investor purchases. According to the Rentals.ca/Urbanation rent report in August, studio rents were down an average of 9.6 per cent (the steepest year-over-year drop among condo apartment types) and are currently sitting at about $1,594 per month across the country.
“The little studios were the darling of the Yaletown [downtown Vancouver] market; they used to go into multiple offers, because everybody wanted them,” said Ian Watt, realtor with Heller Murch Realty in Vancouver. But, he said, rental investors are no longer bidding for these units.
Mr. Watt said another part of the studio market has also been disrupted: End-users, or those who actually want a studio apartment for themselves, and not a tenant. Changes to local tax rules, such as the vacant home taxes, has cut demand from those who used to own a studio apartment for occasional use. “I’ve done this for 21 years. In Yaletown, a lot of people would live in Calgary, live in Victoria, and have a studio [here]. People would love to fly into Vancouver and have a crash pad. But with all the taxes, it’s cheaper to stay at the Fairmont,” he said.
Measuring the carrying costs against luxury hotel rates limits the type of person who wants to own a high-priced studio apartment. “You’re left with a high-income person who wants to live in a little box. A school teacher or a professional, like a young doctor, making $100,000-$150,000 a year, doesn’t want to be in 450 square feet,” Mr. Watt said.
Sales of tiny condos offer big hints at where the market may be headed
That has translated into a frozen market, where so far in the first four months of 2026, not a single studio under 500 square feet has sold in Vancouver, according to Wahi’s data. According to Realtor.ca, there are more than 150 studio condos for sale in the city with prices between $250,000 and $650,000.
“Right now, in downtown and Yaletown, there are 69 for sale, and I can see price drops on a lot of them. Some of them are 300 days on the market,” said Mr. Watt.
Meanwhile in Toronto, there are more than 1,000 condos under 500 square feet for sale as of September, with prices ranging from $300,000 to $900,000. According to Wahi, in the first four months of 2026 saw only 48 studio units sold in the city, with an average price of $413,135, or $953 per square foot. That is the first time this decade that per-square-foot prices have dropped below $1,000. At the current pace, Toronto will see fewer units sell this year than in 2025, when 299 studios sold for an average sale price of $1,048 per square foot.
A popular narrative in Toronto’s real estate market is that small “dog-crate” condos are on their face undesirable. But while most Ontario condo builders have backed away from launching new multifamily apartment buildings, Sean Mason, founder of home builder Sean.ca Inc., is preparing to launch sales in Barrie, Ont., at a 134-unit project on 405 Essa Rd., with a thesis that it’s not the size of a condo that matters, but the price.
A rendering of the condo project at 405 Essa Rd. in Barrie, Ont.Sean Homes
In his new project, studio apartments start at just under $250,000, and the majority of the building (75 per cent) will be priced under $425,000. His company has found savings on almost every element of the project: he’s getting assistance from the city on zoning for density and development charge relief; provincial and federal tax incentives for new home sales; using mass-timber building materials to shrink time of construction; and finding smaller, more efficient HVAC equipment and appliances from around the world to give the suites the maximum livable space. In his experience, small isn’t a dirty word.
“The rest of the world does this. When you go to Europe, they are used to smaller. North Americans are energy pigs, ground pigs, material pigs. We design big, massive stuff,” said Mr. Mason.
A rendering of a unit in the Essa Rd. condo project.Sean Homes
“My wife and I went to Sweden and Denmark; in Stockholm they’re building 14- and 18-storey mass timber buildings, tens of thousands of units,” he said. During a tour with one of the builders, he mentioned his plans for 405 Essa included studios that were 375 square feet; his guide thought that was over-large. “She goes, ‘Oh my God, we never go over 200 square feet in Stockholm.’ So these things are done in the rest of the world,” he said.
Mr. Mason’s fundamental argument is not about size, it’s about affordability. When he began marketing and collecting information for preregistration interest, he noticed there was a growing pool of thirtysomething first-time buyers who are unable to pull together $500,000 or $700,000 for a townhouse.
“They don’t want to live in a crappy basement apartment any more. I’m looking at it from ‘What can they afford?,’” he said. “Someone working at a grocery store can afford this.”