One great short magical realism novel is 'The Metamorphosis' by Franz Kafka. In this story, the main character Gregor Samsa wakes up one day transformed into a giant insect. It blurs the line between the real and the surreal, exploring themes of alienation and the human condition in a very unique way.
Another one is 'A Very Old Man with Enormous Wings' by Gabriel García Márquez. It tells the story of a man with wings who appears in a village. Márquez is a master of magical realism, and this short story is full of his typical elements like the blend of the ordinary and the extraordinary, and it also makes the readers think about human nature and how we react to the unknown.