Why does Toronto almost exclusively build micro condos owned by investors? And why have we decided that families don’t belong in our downtown core?
I’ve heard every excuse for Toronto’s obsession with tiny condos.
Some say it’s illegal to build family-sized units. Others claim it’s impractical because families don’t plan their housing needs five years in advance - the time it takes to complete a condo tower. Still others argue that we need to legalize single-stair buildings, like those found across Europe, to make larger units viable.
But anyone who’s traveled - or even visited a Toronto condo built in the 1980s or 1990s - knows it is possible to build larger units for families. We simply stopped doing it.
Developer Pouyan Safapour of Devron Developments offers a different explanation - and it has nothing to do with architecture or planning policy. It’s about how we finance new condos.
In cities like New York, Berlin, and Copenhagen, developers build first, then sell. Banks and builders carry the risk. They design homes for the people who will actually live in them. In Canada, the process is reversed: developers must pre-sell 70% of their units before they can get financing. That means most condos are sold to investors long before construction begins.
The result?
What gets built is dictated not by end users, but by mom-and-pop investors looking for rental income. And those investors overwhelmingly prefer small, one-bedroom units. So that’s what we build—over and over again.
If we want to change what gets built, Safapour argues, we need to change how we finance condo construction. It’s a structural problem, not a zoning one.
You can find links to my full conversation with Pouyan below on YouTube and our podcast. It was one of the most eye-opening discussions I’ve had on housing in years.
While most housing pundits are still chasing short-term fixes - cut taxes, bring back foreign buyers, etc. - Safapour is focused on the deeper structural problems that explain why our housing market keeps failing Canadians.
Until we fix those, we’ll keep building the wrong supply - and wondering why affordability never improves.
YouTube:
https://www.youtube.com/watch?v=C0iE_2nMNY8
Podcast:
https://movesmartly.libsyn.com/why-canada-only-builds-micro-condos-and-what-we-can-do-about-it
John Pasalis is President of Realosophy Realty. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn
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