The Return of the Micro Investor Condo: Are We Really This Dumb?

Toronto’s condo market is drowning in inventory. But don’t worry—the sucker cycle always finds a new sucker. Or maybe, just maybe, it’s all working exactly as designed.

The Setup: My Buddy, The Pre-Condo Believer

Back in 2017, a good friend of mine—we’ll call him James (because that’s his real name and he deserves this)—called me all fired up.

“Bro,” he said, “I want to buy five pre-construction condos.”

“Five?” I asked. “Downtown?”

“Anywhere under $500K,” he said. “As long as it cash flows.”

Now, I’ve known James a long time. Smart guy. Great career. But real estate savvy? Let’s just say… he once called me to ask if a floorplan with no windows was “efficient.”

I told him flat-out:
“James, they won’t cash flow. Not now. Not ever. You’re buying negative cash flow wrapped in quartz countertops.”

He laughed.

“Come on, man. You developers just don’t want the little guy to win.”

No, James. I am the little guy. I’m just older, more tired, and allergic to bleeding money every month.

Did he listen?
Of course not.

He bought all five. VIP access. Assignment rights. Furniture packages. The whole pre-con buffet. Now he’s got five tiny units that don’t cover the mortgage, can’t be assigned without taking a haircut, and are competing against thousands of identical listings.

Every few months, I get a text:

“Do you know a good property manager?”
“Do you think rents are going up?”
“Should I Airbnb them?”
“Do you think the builder will let me out?”

No, James. And stop asking.

Where We Are Now: The Inventory Avalanche

Toronto’s new condo market is stuck.
There are tens of thousands of units either unsold, under construction, or silently sitting in the “whoops” pile—where assignments go to die.

Most of them are under 500 square feet. Built for investors, not humans.

They were never meant to be lived in. They were meant to be traded—like NFTs with drywall.
Now they’re financial hand grenades with 5-year mortgage fuses.

And the developers? Most of them already walked away with the profits. It’s the investors left playing musical chairs—except the music stopped, the chairs are on fire, and the building's got no occupancy permit.

What Would It Take for a Comeback?

We’ll need one—or all—of the following miracles:

• Interest rates drop to zero again.
  Good luck with that. Unless Jerome Powell and Tiff Macklem both get replaced by Dr. Seuss, that party’s over.

• A flood of wealthy new immigrants, all willing to buy 400-sf bachelor units with no balconies for $700K.
  Not impossible. But they might choose Miami. Or literally anywhere else.

• Developers cut prices by 30%.
  That’ll go over well with the VIP investors who paid $1,800/sf. And the bank. And Tarion.

• Or, we all just agree to pretend it’s 2021 again.
  Bring back the Reddit hype, the crypto bros, the lineups at sales offices. Fire up the smoke machine and get the laser pens out.

Why Would Investors Fall for It Again?

Because they always do.

Toronto real estate has the memory of a goldfish in a hot tub.

We’ve been through this. Over. And over.

• 1990: The original investor condo crash.
  Downtown towers were half-built, half-empty, and half-price by the mid-’90s. The only buyers left were dentists and developers who could afford to wait a decade. Sound familiar?

• 2008: The global financial crisis.
  Everyone panicked… for about ten minutes. Then we realized CMHC would backstop everything with insurance and blind optimism. Prices dipped and came roaring back with low rates and foreign money.

• 2017: The foreign buyer tax and stress test combo.
  Caused a brief dip. Then pre-con sales picked right back up. Developers offered “rental guarantees” and people lined up for 300-sf boxes in North York.

• 2020: COVID hits. Short-term rentals implode.
  Condos in downtown Toronto sat empty. Landlords panicked. But by 2021? We were back to launching towers over Zoom at $1,700/sf with “virtual champagne events.”

We forget every single time.
We act shocked—shocked!—that speculative housing built for spreadsheet math doesn’t work as actual housing.

And then… we do it again.

Why?

Because the pitch is always irresistible:

“Real estate always goes up. Pre-con is safer. Buy now, pay later. It’ll be worth more by the time it’s built.”

That’s not a financial plan. That’s a Vegas strategy.

How Do We Stop It From Happening Again?

Let’s say, theoretically, we cared about preventing another boom-bust disaster. Here’s what we’d do:

• Set a realistic minimum unit size.
  Cities should stop approving 280-square-foot “junior 1-bedrooms” that feel like sleeping in a hallway.

• Reform CMHC underwriting.
  Stop encouraging debt-fueled speculation by insuring garbage that barely qualifies as shelter.

• Eliminate the VIP broker circus entirely.
  No more platinum agents. No more exclusive “early access.” No more 11PM worksheet pressure cookers in hotel ballrooms. Housing shouldn't be sold like concert tickets. If a unit is good, let it speak for itself. If it’s not, don’t sell it with fog machines and bonus miles.

• Ban assignment clauses—or make them hurt.
  You shouldn’t be able to flip a unit before it’s even built. It turns housing into a casino, with zero consequence if you crap out. If you buy a unit, you should be expected to close on it. Or at least bleed a little trying.

• Add real investor disincentives.
  Like higher taxes on short-term holds, or limiting financing on second (or fifth) properties. Investors shouldn’t be the primary audience for housing.

But… will we?

No.
Because too many people make too much money from things staying broken.

Maybe It’s Supposed to Be This Way

Maybe this isn’t a bug in the system. Maybe it’s the point.

• High immigration feeds the machine.

• High prices boost land values and tax revenue.

• High risk keeps banks in control.

• And high hope? That sells the next launch.

We build, we sell, we crash, we recover, and we start again.
It’s Toronto’s version of the four seasons.

Final Word: Build Better or Burn Again

The market doesn’t need another 400-square-foot bachelor unit with two-burner cooktops and a Juliette balcony.

It needs housing people actually want to live in.

Bigger units. Real layouts. Better design. Functional space.
Maybe even—dare I say it—windows in the bedroom.

We need to stop building for spreadsheets and start building for humans.
Or we’ll be here again in five years… sipping coffee with James while he asks me if now is a good time to buy.

(It's not, James. It's really, really not.)

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Or better yet—send it to their mortgage broker.