Like some other big cities around the world, I believe that the city should legislate/mandate minimum unit sizes, and even require a mix of 2- and 3- bedroom units that is more representative of the city population (this is probably not in the City of Toronto act, so would require the Province). This wouldn't result in everything being out of price (e.g. 1000 sq ft for 700K). Rather, the price of land would decline, so that 1000 sq ft unit would cost 400-500K. Economically, it would hurt landowners seeking to sell at current premiums, developers who paid a mint for what they have, and the city who benefits per unit, but it would address the important social issue of creating a built environment that supports diverse family/household sizes. Neighbourhoods that have the full spectrum of family/household sizes/types are more stable, allow people to stay in their neighbourhood as their needs change.
Our elected officials have given into the nonsense that the market only demands studio and 1-bedroom units of 500 sqft or less. My proposed strict regulation may sound like big brother meddling, but it gets down to basic issue of neighbourhood stability and sustainability, and creating communities that allow people to put down roots and maintain them as they transition from single to having children, downsize, and then age in place. The communities that still have a lot of single-family housing stock near by will do better because there are those alternatives in the neighbourhoods (e.g. Leslieville, BloorWest, College, Queen West to some extent). I worry more about the future ghettoization of new condo-centric communities of CityPlace and Liberty Village. There will be a lot of turnover and rentership in these communities by design. Developers have little to no skin in the game once these buildings are finished. They are out of there, and residents are left to live in these communities. Politicians needed to be more forward thinking and tougher on these issues, but it didn't happen