Micro-living has been popular in Europe, Japan and New York for several years now, but only recently is it starting to test the markets in Canadian cities. Also known as “shoebox living,” “pico-dwelling,” and “tiny housing,” the trend substitutes the American dream of a big suburban house and two-car garage for affordable compact living spaces in the inner city core.
An average micro-apartment is between 275 and 300 square feet, just enough for one person and a small pet. They generally cater to young single professionals, students, or commuters who want to downsize on space in exchange for convenience, accessibility and the excitement of urban life. Despite being more popular in cities such as Toronto and Vancouver where housing affordability is an actual problem, several micro-housing projects have recently surfaced in Montreal. In fact, Montreal is home to Canada’s smallest condo- a 286 square foot studio in the Lowneys sur Ville, priced at $108,000. (That’s almost half of Quebec’s average condo size; 480 square feet!)
To investors, the micro-living trend can prove to be interesting. Micro suites fetch a higher price per square foot, bringing in an average of $3 per square whilst other condos average at $2.5. Their prices are attractive, ranging from $100,000 to $200,000 and presenting an affordable entry into market for many younger investors. As the concept is so new, market demand is still uncertain and opinions are mixed about the future of the industry. While many doubt that Montreal is ready for the tiny-living trend, almost one of three Montrealers live alone, making it the top ranking city in Canada for single-dweller living. Developers have, in fact, been seeing some success with investors and first time buyers. The 350 square-foot units in District Griffin’s “Condo Genius” project met their sales goals, leading the developers to include 80 more tiny houses in the plans for the third phase.
There are, however, serious issues with micro-condo marketability. The biggest being that the five biggest banks of Canada are doubtful as to whether they will provide financing for these units. The concern is that if the housing market faces a down-turn, investors might look to sell and lenders are unsure whether they will be able to recover their mortgage. This means that investors will need to either cough up the entire sum up-front, or turn to credit unions and private lenders with higher interest rates.
Bureaucracy is another hurdle to overcome; cities have varying bylaws concerning the minimum square footage of living spaces, and policy makers are wary of the hike in land value that might ensue from the micro-condos’ higher prices per-square-foot.
Regardless of the whether or not micro-condos are a good investment, the number of development projects including micro-sized units in their plans are likely to proliferate.Interestingly, their branding won’t include the word “micro.” According to the ULI report on market acceptance, the term has already begun to arouse negative connotations with overcrowding, high density, and transient populations. Developers and operators are instead switching to adjectives such as “innovation units,” “nano-suites,” “launch-pads,” and “urban flats.”