Something strange is happening in the Toronto real estate market.

Some of the GTA's tiniest condos are losing value at almost twice the rate of larger units. Meanwhile, buyers looking for certain types of homes are discovering that having lots of listings doesn't necessarily mean having lots of choices.

And apparently, some buyers are getting creative. We're talking about trying to scare other buyers away from a house by pretending there's already an offer.

Yes, really.

So what's going on? We may be looking at a housing market with too much of what buyers don't want and not enough of what they actually do.

And that changes the conversation for just about everyone thinking of buying or selling.

Toronto's Tiny Condos Have a Not-So-Tiny Problem

Remember when buying a small condo seemed like a pretty smart move?

Lower purchase price. Smaller down payment. Potential rental income. And hopefully, some appreciation along the way.

For buyers and investors, those little units offered a way into a market where larger properties were often out of reach.

But things have changed.

According to an analysis from RPS and Wahi discussed, GTA condos under 500 square feet lost approximately 12.2% of their appraised value per square foot between 2020 and 2025.

Condos between 500 and 700 square feet? Their decline was approximately 6.2%.

That's roughly half the drop.

And in 2025 alone, micro condos lost an average of $152 per square foot compared with the previous year.

That's quite a difference for properties that might only be separated by an extra hundred or two hundred square feet.

So why are the smallest condos taking the biggest hit?

We Built a Lot of Small Condos. But Who Actually Wants Them?

Here's where things get interesting.

A Bank of Canada analysis discussed in the video identified a pretty remarkable mismatch in Toronto's condo market.

• Micro units account for approximately 60% of new condo supply coming onto the market.
• Only around 30% of new households have the characteristics normally associated with buying these smaller units.

Think about that for a second.

Roughly 60% of the incoming supply is aimed at a potential buyer pool representing around 30% of new households.

That's a lot of tiny kitchens looking for someone to cook in them.

And there's another issue.

Many of these condos were designed around the investor buying the unit, rather than the person who would eventually live there.

On paper, a 450-square-foot condo might look fantastic. Lower purchase price, potential rental income, and the possibility of future appreciation.

But now imagine actually living in it.

You're working from home a couple of days a week. You need somewhere to put a desk. Maybe you're living with a partner. Maybe you're thinking about starting a family.

You'd also like a little storage space. And perhaps the luxury of walking around your bed without turning sideways.

Suddenly, that extra 100 or 150 square feet looks pretty appealing.

That's why the difference between a 430-square-foot condo and a 650-square-foot condo can mean two very different groups of potential buyers.

Should Small Condo Owners Be Worried?

Not necessarily. This isn't a suggestion to panic and put your condo up for sale tomorrow.

Location matters. Layout matters. Maintenance matters. Views matter. And what you originally paid for the property certainly matters.

But there's one question worth asking:

Who is going to buy my condo when I'm ready to sell?

Because eventually, every investor-owned condo needs another buyer. And understanding what that future buyer actually wants is becoming a pretty important part of the equation.

Twenty Homes for Sale Doesn't Mean Twenty Good Options

Now let's look at the other side of the GTA housing market.

Imagine you're searching for a detached home. You open your real estate search and see 20 listings.

Fantastic! Plenty of choice, right?

Well, not so fast.

• Five are significantly overpriced.
• Three back onto major roads.
• Two need approximately $150,000 in renovations.
• Four have layouts you absolutely hate.
• Three aren't in the school boundaries you're looking for.

And just like that, your 20 options have turned into three ... Three!

That's the difference between having inventory and having inventory people actually want to buy.

A market can have thousands of active listings, but that doesn't mean every buyer has thousands of realistic choices.

And when buyers discover that the homes they genuinely want are few and far between, things can get a little competitive.

Sometimes, apparently, a little too competitive.

When Buyers Start Playing Dirty: A Tottenham Real Estate Story

Just when you think you've seen everything in real estate, someone finds a new way to surprise you.

Here's what happened with a recent home search in Tottenham, north of Toronto.

The buyers were looking for a semi-detached home under $800,000.

Except there were only two options available.

And one of them smelled like someone had just smoked an entire pack of cigarettes inside.

Let's just say it wasn't winning any points in the first-impression department.

That left one home the buyers genuinely liked.

They'd already viewed it and decided to return for a second look from the outside. While they were there, another group of interested buyers happened to be on the driveway.

And that's when things got strange.

The other buyers mentioned that they'd heard there was already an offer on the property.

Now, imagine hearing that when you've finally found a house you like.

Here we go again. Another bidding war?

Except there was one tiny problem.

There was no offer.

None. Zero.

The competing buyers had apparently made the whole thing up, hoping the other interested buyers would get discouraged and walk away.

And when the listing agent heard about it, she was furious. Apparently, it wasn't even the first time something like this had happened.

That's a pretty unusual way to try to reduce your competition.

Real Competition or Manufactured Urgency?

The video also mentions a separate incident in Ontario where a real estate agent was fined $20,000 after claiming there was an offer on a listing when there wasn't.

Different circumstances, and a more serious situation, but the psychology is worth understanding.

If someone believes there's competition, it can change how they respond to a property.

They might rush to make a decision. Or they might decide they want nothing to do with another bidding war and walk away entirely.

That's why it's important to understand the difference between actual scarcity and manufactured urgency.

They're definitely not the same thing.

So, Is Toronto a Buyer's Market or a Seller's Market?

Maybe that's no longer the most useful question.

Because look at what's happening.

On one side of the market, you've got smaller condos competing against a large supply of similar properties, with a potentially smaller natural buyer pool.

On the other side, you've got families searching through dozens of listings and finding only two or three homes they'd actually consider buying.

Same GTA. Two completely different experiences.

One seller might be wondering where all the buyers have gone.

Another could have multiple interested buyers focused on the same property.

Both situations can happen at the same time.

And that's why broad headlines about the Toronto real estate market don't always tell you what's happening with the specific type of property you're interested in.

What Does This Mean If You're Buying or Selling?

If You're Selling

Don't just count how many properties are listed in your price range.

Look at how many are actually competing with yours.

Same type of home. Similar price. Similar features. Same potential buyer.

That's the competition that really matters.

And if you're selling a smaller condo, think carefully about who your likely buyer will be and what alternatives they'll have.

If You're Buying

Instead of asking how many homes are currently for sale, ask yourself how many you'd genuinely want to purchase.

Because having 20 listings to scroll through doesn't help much if only two or three meet your needs.

And if someone tells you there's competition for a property, remember the Tottenham story. Don't let manufactured urgency make your decisions for you.

The Biggest Shift May Be What Buyers Are Willing to Pay For

There's a lot of conversation about whether real estate prices are going up, going down or getting ready to take off again.

But perhaps the more interesting story is what buyers are choosing to spend their money on.

Which properties are attracting attention?

Which ones are being overlooked?

And how much does the difference between a property that simply exists on the market and one that buyers genuinely want affect the outcome?

We may be moving toward a market where two properties in the same city, at similar prices, experience completely different results.

Not because one is in a buyer's market and the other is in a seller's market, but because buyers are becoming more selective about what they're willing to pay for.

So the next time you hear someone say there's plenty of inventory in the GTA, there's one question worth asking:

Plenty of what, exactly?

Because that might be the most important part of the conversation.