A new report covered by Denise Paglinawan in the Financial Post puts numbers behind something many GTA condo sellers have already been feeling: the smallest units are under the most pressure.

According to Wahi Realty’s analysis, smaller Toronto-area condos have been losing value faster than larger units. The report looked at per-square-foot appraised values across the GTA and Greater Vancouver, and the contrast is pretty sharp. In Toronto, the smallest condos have been falling the most. In Vancouver, similar micro units were still up 4.9 per cent.

That does not mean every small condo is a bad property, or that nobody should buy one. It does mean the buyer pool has changed, and that matters if you own, invest in, or are thinking about purchasing a compact unit.

Why the Smallest Units Are Struggling

The simplest explanation is that most people do not actually want to live in a tiny condo long term.

Wahi economist Ryan McLaughlin pointed out that many Canadians would prefer a home with at least three bedrooms. That makes studios, micro units, and very small one-bedrooms a harder fit for end users. They can work for one person, a student, a pied-à-terre, or an investor looking for a rental, but they do not serve as many life stages.

That limited appeal becomes a bigger issue when buyers suddenly have more choice.

A few years ago, some buyers stretched into a small condo because that was all they could afford. Now, with more inventory and softer pricing, some of those same buyers can look at larger units. If the monthly payment on a 600-square-foot unit is suddenly within reach, the 400-square-foot option has to compete harder.

That usually shows up in price.

Wahi’s report says GTA micro condos lost an average of $152 per square foot year over year in 2025. That was the steepest annual drop in the five-year window they reviewed. Units between 500 and 700 square feet also declined, down 6.2 per cent in the GTA, while similar-sized Vancouver units rose 19.4 per cent.

That is a major difference between the two markets.

The Investor Piece Matters

For years, small condos were not just homes. They were rental investments.

The Financial Post article notes that purpose-built rental construction had lagged for decades before the pandemic-era condo boom. In practical terms, condo investors helped fill the rental supply gap by buying smaller high-rise units and leasing them out.

That worked when prices were rising, rents were climbing, and borrowing costs were low. The math is very different now.

Higher mortgage rates, condo fees, property taxes, insurance, and slower appreciation have made some investor-owned units harder to justify. When investors step back, the smallest condos lose a major source of demand.

That does not mean there is no rental demand. There clearly is. But rental demand and investor demand are not the same thing. A tenant may still need a unit, while the owner may no longer like the return after expenses.

That gap is part of what is putting pressure on resale pricing.

Buyers Have More Leverage Than They Did

One number from the Wahi report stands out: in July, condo prices were negotiated below asking in 98 per cent of GTA neighbourhoods where at least five units sold.

That is not a small pocket of weakness. That is broad negotiating room.

For buyers, this is where the opportunity may be. A small condo that looked overpriced two years ago may now be worth a second look, especially if the building is well managed, the layout is efficient, and the total monthly cost works.

But buyers still need to be careful. A low price does not fix a bad floor plan, high maintenance fees, poor reserve fund planning, or a building with too much investor turnover. It also does not guarantee the unit will be easy to resell later.

If you are buying a compact condo, the question is not only, “Can I get a deal?”

It is also, “Who is going to want this unit when I sell?”

That future buyer matters.

What Sellers Should Take From This

If you own a small condo in the GTA, pricing matters more than ever.

This is not the market for testing a high number and hoping someone bites. Buyers are comparing your unit against larger condos, newer listings, assignment sales, and rental options. If your unit is small, the listing needs to be positioned clearly.

That means showing what works. Good storage, natural light, a functional layout, low carrying costs, transit access, and a strong building can still make a small unit attractive. But the marketing has to answer the obvious buyer concern: “Can I actually live here comfortably?”

If the unit is investor-owned, the numbers need to be realistic too. Some owners are still anchoring to peak pricing, but buyers are not. Neither are lenders, appraisers, or competing listings.

The better move is to understand the current value before making a decision. Sometimes selling is still the right call. Sometimes holding and renting makes more sense. Sometimes refinancing or restructuring buys time. But guessing is not a strategy.

The Bigger Lesson for the GTA Condo Market

The condo market is not one single market.

A studio near transit, a 650-square-foot one-bedroom with parking, a two-bedroom family unit, and a luxury waterfront condo can all move differently. The Wahi report is useful because it shows how much size and buyer type matter.

Small condos had a strong run because they were affordable entry points and popular investment vehicles. Now that affordability, financing, and investor demand have shifted, they are feeling the pressure first.

The takeaway: small condos are not automatically a problem, but they need sharper math. Whether you are buying, selling, or holding one, the decision has to be based on today’s buyer demand, not yesterday’s peak pricing.