The Ever-Shrinking Condo.

Author:Vachon, Marc
Position:Report
 
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Introduction

Within the last 10 years, we witness in Vancouver, Toronto and Montreal the rise of the micro-condo which varies from 225 to 495 square feet. While relatively new in Canada, micro-condos and micro-apartments gained "momentum in densely populated cities, like New York, London, Tokyo and Paris, after the 2007 global fmancing crisis" (Joo 2017:294). This is also the case, for example, in Australia, whereas Sidney and Melbourne saw a rise in micro-apartments of 15.5 square meter (166.84 sq. ft.). Both cities have a high population pressure and a chronic shortage of affordable housing. In Hong Kong, micro suites have existed for a long time, but in the last few years we witnessed the rise of the nano-condo flat less than 200 square feet.

While a global phenomenon, there is very little academic research and literature on the subject of micro-condos (Been, Gross, 8c Infranca, 2014; ULI, 2014; Djukic, 2015, Christensen, 2016, Einarson 2016). Furthermore, all of them focus mainly on the United States (New York, San Francisco, and Boston) and to a lesser degree Vancouver. In turn, there is a plethora of non-academic literature found in news articles, journal articles, online content and magazines. This is not so surprising given the recent development of micro-condos in some countries and the challenges of its inception within the financial (mortgage, resale value) and urban (zoning, building codes, etc.) landscape.

In this article, I will examine the potential economic, demographic and cultural causes and consequences of the rise of micro-condos and their impact on the urban landscape and public space. As such, the focus is on three cities, Vancouver, Toronto and Montreal, home of the first micro-condo development within the last ten years. While all previous studies mainly focussed on the economic aspects of micro suite development this article contributes to contemporary research by concentrating on the social demographic and cultural factors which contributed to the emergence of micro-condos within the Canadian urban landscape.

The article is divided into four sections. The first section illustrates how house and condo average size fluctuated over the years and since 2009 both type of housing has shrunk in size. The second section consists of an overview of the various micro-condos development which occurred in Vancouver, Toronto and Montreal. The third section discusses and compares the barriers that micro-condo developments faced (or have faced) in Canada, the United States and Australia. The final section examines potential reasons and causes of the rise of micro condo: economic, demographic and cultural shift, young professional and downtown and technology. As such these various aspects have contributed directly or indirectly to the rise of micro-condo.

In terms of methodology, we incorporated a statistical analysis on the rise of individuals living alone in Canada, given that these would be the prime candidates to live in a micro suite. We also surveyed the average price of houses and condos to contrast the different factors and reason affecting the rise of micro-condos in the three cities. Additionally, the literature review included an extensive search of online materials, news and journal articles, magazines and books using the various monikers used for micro-condos, such as: micro suite, micro-home, micro-flat, micro-apartment, shoebox apartment, and Mickey Mouse apartment or efficiency dwelling unit. Finally, we discuss the various changes in technology which impact the footprint of a household. Thus, the overall analysis seeks to examine mainly the non-economic aspects of living and buying or renting a "home" of less than 500 square feet--a phenomenon which 30 or 40 years ago would not have been popular, efficient or practical given the technology, lifestyle and demographic of the time.

1- The Ever-Shrinking Home and Condo

From the bungalow of the 1950s to the 1990s McMansions, the Canadian single-home has progressively increased in square feet into one of the largest domiciles in history. In the 1950s and 60s, Canada Mortgage and Housing Corporation (CMHC) offered house designs and plans that were often no bigger than 1,000 sq. ft. In the 1970s, as Canada became more affluent, the average house size jumped from 1,075 to 1,100 sq. ft. and included a walk-in closet, a family room, and an enclosed garage. In the 1980s, the square footage increased again as the Baby Boomers came to home ownership and they wanted big wide hallways, huge entrances and large garages, etc. By the end of the 1990s, the McMansion appeared and averaged 2,300 + sq. ft. During that time, Canadians lived in some of the world's largest houses inhabited by some of the world's smallest families. By 2002, Canada surpassed Australia, USA and New Zealand as to how many citizens owned a home with more than five (5) rooms (Hopper 2012). By 2007, the square footage growth slowed down and dropped from an average of 2,300 sq. ft. to 1,900 sq. ft.

Why these shifts in house average size? There are various reasons ranging from shrinking lot sizes, skyrocketing land prices and a new generation of homeowners (the millennials) who seem to prefer to settle downtown as opposed to the suburb. Thus, the Canadian house size seems to have reached its apex. Another observation by a chief economist at the TD Bank claimed that we simply ran out of space in many of our cities: "We went from land rich and house poor to land poor and house rich" (Hopper 2012).

The same pattern of diminishing average house size can be observed in the United States. Between 1950 and 2000, the typical American house size more than doubled, rising from 938 sq. ft. to more than 2,200 sq. ft. And today, like Canada, the average size of an American single-home has dropped below 2,000 sq. ft.

In turn, the rise of the condo, as a viable popular form of housing, coincided with the incredible rise in price of single-family homes which in most instances has become out of reach for most first-time buyers. Thus, many buyers have moved to the condo market. This is the case for Toronto and Vancouver, and to a lesser degree for Montreal. In 2005, about 35% of new units built were condos, now it's about 60% (Perkins May 02, 2014). By 2011, condo units accounted for 51% in Toronto, 56% in Montreal and 58% in Vancouver of all new dwellings (Harris 2015 334). This trend continues given that in the first half of 2015, Toronto condo developers sold nearly 11,000 condo units (the third best year on record). Most of these sales have been among presales, consisting of 55 new projects that developers launched in the city of Toronto.

Similar to the housing market, we are witnessing the same shrinkage of average size for the condo market. Between 2004 and 2009, the average size of a new condo oscillated between 875 and 925 square feet. Starting in 2009, the average condo size declined steadily and since 2012, the average size of a new condo is 797 square feet (see Fig. 1).The decline in size is equivalent to the size of a 10-by-12 foot room, approximately 125 sq. ft. In others words, Toronto, Vancouver and Montreal condo market went from two-bedroom and two-bedroom-plus den suites to one-bedroom and one-bedroom-plus den suites. (Carras 2012).

The decline in square footage is attributable to many reasons. From the point of view of developers, this is due to the ever-increasing rise of land prices over the years, the growing cost to build new buildings, and the abundance of construction that is taking place. The latter raised the demand for many services associated with construction resulting in higher cost. Another interesting aspect is the fact that some developers have cut the ceiling heights. This means more density since "if you take 6 inches per floor over 18 storeys, you get another storey, it does add to your cost efficiency and cost less" (Perkins April 24, 2014). In 2007-2008, the average was 9 inches and we are now seeing a further decrease.

Whereas historically the condo market used to be driven by people who were downsizing and looking for something convenient, smaller and manageable, it seems to be also driven today by affordability. Yet, given the high cost of housing, be it condos or homes, there is also another trend that has affected the average size of the condo market: the micro-condo.

2-The Micro-Condo Overview: Canada

What is a micro-condo? Generally, a micro-condo is a unit (own or rent) that is between 290 and 495 square feet. In fact, to some degree the size of micro suites are relative to the market in which they exist. In New York and Philadelphia 400 sq. ft. is the minimum size requirement of a new unit. But, for the adAPT NYC competition, the rule was dropped for micro apartments and suites between 275 and 300 sq. ft. (including a fully functioning kitchen and accessible bathroom). In San Francisco, some units are as small as 220 sq. ft. as long as 70 sq. ft. is allocated to a bathroom and a kitchen. In the District of Columbia, the minimum size is 220 sq. ft. and in Boston micro suites minimum requirement is 450 sq. ft. and must be within one mile of public transit. (ULI 2014).

Thus in general, a micro-condo consists of a unit less than 500 square feet and its minimum and maximum requirement will vary according to the city in which they exist. A typical unit might have an island in a kitchen that can be extended into a full-sized dining table and a TV that slides over so that a built daybed...

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