You just don’t see a lot of 3-bedroom condominiums listed for sale in the downtown core, and even fewer are being built when you look at new construction.

Is this a new trend?  Did we miss something along the way?

It comes down to supply and demand, but more specifically, it comes down to the actual use of the space itself…

How many times have I written about the proverbial condo “den”?

What percentage of properties listed on MLS as having a “den” actually contain a space that a buyer would consider a true “den?”

I’d say about 30%, to be honest.

I can’t believe what passes for a den these days, nor can I understand why listing agents continue to claim a condo has a “den” when really all it has is a small space for a desk adjacent to the living room.

To me, a “den” is a separate room, with a door (or a space where a door could be installed) that does not happen to contain a window.  The absence of a window is why it’s a “den” and not a bedroom.  The room should be at least six feet by six feet as well.

Unfortunately, most “dens” being advertised through new developments are basically the space after a jog in the wall or where the HVAC juts out of the wall.  They’re essentially an extension of the living room; but that’s not how the real estate Gods envisioned dens when they first drew them up…

I was in a property last week that was 1800 square feet and was listed as a “two bedroom plus den.”  I was amazed to find that the den was basically a third bedroom!

Think about how many times you see this caption on an MLS listing: “Den could be used as second bedroom!”

How many times is that true?  And if you truly could use that den as a second bedroom, how comfortable would it be?  I suppose if you are two college students living in a $1500/month 1-plus-den, you might want to install a curtain rod in that tiny, cramped, dark space by the front hall and turn it into a bedroom.  But in reality, these spaces offer no more than a place to store a futon in case a guest wants to crash at your condo once a month.

But at this 1800 square foot condo, however, the den met all the criteria of a third bedroom.  First, it had a window.  And in actual fact, this window had a door that led out to the terrace!  Second, the room was a generous 12 x 10 feet and was larger than many CityPlace “master” bedrooms.  Third, it had two sliding doors that could completely separate it from the living space.  It was, for all intents and purposes, a third bedroom.

At this point, you may be wondering, “Wasn’t this post supposed to be about three-bedroom condos?”  Yes, it is.  I’m getting there…

My client and I both looked at this bedroom-like-den and decided that the space in this condo would be better utilized if this “den” wasn’t there.  Specifically, if you removed the two walls that separated it from the living space and the hallway respectively, you would be extending the living room and you migh never notice that at one time, this was a separate space.

The problem with this condo was that the living space was too small.  It had an open concept kitchen with a dining area by the patio doors and a very large living room, but for $1.2 Million, you want a GRAND space to entertain.  You don’t want three bedrooms – one of which is being called a “den.”

In a $1.2 Million condo, you want luxurious space, and I just don’t think that the presence of a third bedroom or den over that of a much larger living space necessarily screams “luxury.”

So who buys condos in the $1.2 Million – $3 Million range?

Well, you have the young Playboys that certainly don’t need a third bedroom because they barely need the second ones.  They just need room for their pool table, pinball machine, and that green-felt poker table.

You’ve also got the super-rich who use million-dollar condos as “downtown entertaining spaces.”  I client of mine at Quad Lofts purchased his space from a very well-known CEO of a very well-known Canadian company.  They left the fridge stocked with gingerale, Coke, Sprite, soda, and tonic water…

Then you have the rich businessmen who need a crash-pad for when they’re in town a few times per month.  They have the money to throw around, so why not spend, spend, spend on what is essentially “too much” space?

You have retirees who have sold their massive 3000+ square foot homes and who have moved into the city so they can be closer to theatres, restaurants, and all their other friends.

And then, I suppose you have families.

Or do you?

This is the point I’m trying to make.  Not a whole lot of families live in condos, or more specifically, larger families.

There are lots of 3-person families living in condos.  How many young couples have their first child in a condo?

But what about when the family gets larger than that?  How many couples have two children in their condo?  And keep in mind – I’m speaking primarily about downtown Toronto condos.  I’ll provide more on this later…

The idea of having a 3-bedroom condo downtown doesn’t seem to make a lot of sense, because I truly believe that so few families are living in downtown condos, and the people I mentioned above (Playboy, middle-age partiers, businessmen, retirees) don’t need the third bedroom.  They would rather have a larger “entertaining space” than a bedroom which would be used once per year.

When I look at the first category that I mentioned – the Playboys, I think about a few clients of mine in particular.  They’re late-20’s investment bankers, or mid-30’s divorcees that want to make up for lost time.

These guys would buy a 2,500 one-bedroom condo if they existed!  All they want is one gigantic living/dining/kitchen to show off in, and the second bedroom is usually full of cardboard boxes.

So who actually has use for a third bedroom?

In the fourth quarter of 2010, there were 1,152 condominium sales in the downtown core (C01,C08).  Of these, only 1.4% or sixteen units were 3-bedrooms.

The funny part is – that number is higher than I might have expected!

Now when you consider my “Families don’t live in downtown Toronto condos” argument, let’s see how other areas of the city compare.

In North York City Centre, of the 453 condo sales in the fourth quarter of 2010, 4.6% were 3-bedroom condos.

In Mississauga City Centre, 7.6% of all condo sales were for 3-bedrooms.

So there are over FIVE TIMES as many three-bedroom condos selling in Mississauga City Centre than there are downtown.  What conclusions can we draw?  Does this point to demographics?  Or is it all about pricing?

Developers certainly aren’t offering any three-bedrooms in pre-construction.  Why would they?  Who’s buying three-bedroom condos?  Even in the “luxury” bracket – only five of the eight condos listed in all of Central TREB districts for over $5,000,000 have a third bedroom.

I would be making an extreme generalization if I said “All families live in houses, not condos,” but let’s agree that most do.  Or at the very least, a majority, and of the four or five-person families that do live in condos, we’ve seen that most of those aren’t in the downtown core.

So perhaps we can conclude that it’s a bit of the chicken-and-egg round-about.

Builders don’t build 3-bedroom condos because buyers don’t buy them.

But if they were in abundance, perhaps families would consider them?

I’m not certain.

In my major buyer demographic, people buy larger condos because they want larger living spaces; not third bedrooms.

If you don’t believe me, just consider that I have a client contemplating knocking down several walls in his condo