I'm not entirely sure what your question is here: a) what is the demographic of people buying small units and b) why would they buy ?
a) There is a huge demographic of people buying smaller, cheaper units. Think of the people in their first year at a new job in the city - maybe they just got out of school and can't afford anything more. People who work in the city during the week but "live" out of town and use the room as a hotel room. People who don't make big money but need to live downtown.
There is a HUGE market for this so I'm not sure what you mean by "who is buying units at $250k" -- the answer is simply - the same people who buy small town homes for $250k outside of the city.
b) Carrying costs for buying a new unit today is similar to a monthly rental payment. However, people like to OWN real estate. It's a tangible, appreciating asset. People would rather pay their own mortgage than a landlords and have something to sell when it's time to move up the property ladder.
I'd love to answer more but your questions are far too vague ....