Renderings of a small scale project by Grid Developments at 163 St. Clarens Ave. in Toronto.COM_N Architects
In a space that’s usually cheery and celebratory, the current downturn in the real estate market gives pause. It’s hard to be a sunshiny Pollyanna when there are storm clouds over the heads of homebuyers and home builders, and learning to pivot has become a necessity rather than a novelty.
The Toronto Region Real Estate Board’s December, 2025 “Market Watch” was particularly discouraging. Home sales were down by 11.2 per cent compared to 2024, and the average house price was $1,067,968, down from $1,120,241. Royal Bank reported an even bleaker outlook on housing starts: Ontario has been in a “steep decline since mid-2024” with high development and construction costs listed as “major barriers,” and, in the Greater Toronto Area specifically, municipal development charges that “make it exceedingly difficult to bring new housing projects to market at prices prospective buyers can afford.”
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“Last time we paid DCs [development charges to the City of Toronto] they were about $36,000 for a one-bedroom and just under $50,000 for a two-bedroom,” said Justin Aykler, principal of Grid Developments, a boutique firm responsible for Sunday School Lofts (covered here May, 2021), The Lofthouse and Steam Plant Lofts (covered here May, 2008). “Now, you’re looking at $53,000 for a one [bedroom] and $81,000 for a two [bedroom],” he said. “It feels like everybody got in on this high market, and the city was not going to be left out of that.”
So, until the city defers DCs or scales them down to reflect the new reality, Mr. Aykler says Grid has been forced to switch from their preferred model of mid-rise, missing-middle projects to “small-scale rental.”
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“At St. Clarens [Avenue] and College [Street], we’re doing five 1,100-square-feet, two-bed, two-bath, nice two-storey, family-oriented suites,” he said. “And it’s very manageable. You still have the same amount of stickhandling without the same fee structure.”
Architect Tom Knezic, who co-founded Solares Architecture almost 20 years ago with wife and architect Christine Lolley, saw the writing on the wall and created a sister company in 2025, Eco-Flats Developments. The company, he said, helps “citizen builders” fill the housing gap. They seem to have hit the right chord. We’re “swamped,” said Ms. Lolley.
A completed fourplex on Davenport Avenue in Toronto by Solares Architecture.Solares Architecture
“Yesterday, I talked to a regular Torontonian who just bought a multiplex – a Toronto Special – and wanted to renovate it and possibly add additional units to it,” she said. “His motivation is to dabble in the market but also to create an opportunity where his grown children will have somewhere to live … which I’m seeing a lot of. People who had their ‘lottery ticket’ when they were able to buy in the 80s, 90s, 2000s, now they’re saying: ‘How do I keep my kids close? How do I give them the opportunities I had?’”
Mr. Knezic and Ms. Lolley said they find single-family homes “incredibly wasteful.” They’ve been creating housing opportunities since 2008 and that time, they’ve accumulated five buildings, which have a total of 13 rental units. One unit is their own residence: “We always have another unit in our primary residence, and maybe [we’ll have] two in the next one,” she said.
Planning changes by the City of Toronto have made it a bit easier to build laneway houses, garden suites and multiplexes. But other factors have also propelled interest in these smaller-scale housing forms.
“[One] aspect of affordability is upfront costs, and in the City of Toronto in particular, a large one is land transfer taxes,” said TRREB CIO Jason Mercer. “That’ll give people pause. They’ll say, ‘Wow, that money’s just in the wind. So maybe I’ll consider renovating the home that I have.’” And that often means basement apartments or ADUs (accessory dwelling units).
Five or 10 years ago, he said, homeowners could reliably expect real estate values to rise, creating a “housing continuum:” buyers would sell and move up if they needed more space. The current situation, he says, has changed the housing stock forever. “What used to be, say, an entry-level detached or semi-detached home, well, now it’s not in that category any more because maybe [the homeowner] added another 1,000 sq. ft. to it, maybe they [renovated] the full interior.”
Blair Scorgie, an urban planner who focuses specifically on missing-middle projects, there are plenty of opportunities for small-scale building in the Toronto area. “There are a lot of lots that qualify for multiplexes and small-scale apartment buildings on major streets, especially in suburbs,” he says. Negative pushback is very real in places such as Scarborough or Etobicoke, but in East York and the (old) city of Toronto, the climate is much more welcoming.
“We’re seeing citizen developers and small-scale builders come to the table. That didn’t exist a couple of years ago,” he said. “We’re also seeing large companies rethink their strategies around multiunit residential, going from a few very large projects to having frank conversations with me … about the major streets scale of stuff” (Toronto’s “Major Streets Study” targets avenues such as Danforth or Roncesvalles to allow “gentle density” vis-à-vis townhouses or six-storey apartments).
If the market downturn creates missing-middle departments in the hallowed halls of behemoths such as Tridel, Mattamy Homes, or Daniels Corp. that continue into the next upswing, everyone benefits.
“You’re probably going to see smaller buildings,” said Mr. Aykler. “Instead of the 60-storey tower you’re going to see 25-, 27-storey towers. You’re not going to see the 500- and 600-unit buildings. … I can see that as a positive because I don’t know if everybody loved that form of high-rise living.”
Editor’s note: This article has been updated to correct the credit for the first image.