What Markham Property Owners Should Avoid Holding During an Economic Downturn

What Markham Property Owners Should Avoid Holding During an Economic Downturn

Former Singapore Prime Minister Lee Hsien Loong once mentioned that Donald Trump, frustrated by tariff issues in his youth, harbored a long-standing resentment toward unfair trade. His tariff war against Canada, started in recent months, is unlikely to end easily. As a result, Canada faces an increasingly uncertain economic future. Job cuts, reduced consumer spending, and persistent inflation are likely trends in the coming years. Canada's economy and the housing market could see a gradual downward trajectory for an extended period. In this environment, property owners in Markham must make careful decisions about what assets to keep, sell, or restructure.

In a declining economy, not all properties hold their value equally. In fact, holding onto the wrong assets can accelerate financial losses. Several types of properties are particularly risky to hold in Markham and even the Greater Toronto Area during the upcoming slowdown.

Properties purchased primarily for short-term rental income, such as Airbnb units, are among the most vulnerable. During economic downturns, even hotels struggle with low occupancy, and private short-term rentals perform even worse. In tough times, owners are more likely to attract problematic tenants, suffer from high vacancy rates, and face continued mortgage obligations. Markham prohibits short-term rentals of less than 30 consecutive days, and although enforcement is complaint-driven, the risks are growing. Those holding heavily leveraged Airbnb properties would be wise to exit while they still can.

Luxury homes and custom-built estates are another category facing risks. These properties cater to a smaller, high-net-worth buyer pool, which shrinks sharply when economic confidence wanes. Liquidity dries up, and even significant price cuts may not guarantee a sale. If you own a luxury home in Markham that strains your finances, selling it before market conditions deteriorate further could be a prudent move.

Vacation properties, such as lakefront cottages or seasonal homes, are highly discretionary assets. In challenging times, people prioritize essentials over leisure. Many Markham families who purchased vacation homes during the pandemic boom could now be facing substantial losses as prices revert to or even fall below pre-pandemic levels.

The remote work revolution, fueled by advancing technology, has drastically reduced demand for traditional office space. Vacancy rates are climbing in downtown Toronto, and suburban areas like Markham are feeling the impact as well. I recently sold an office near Buttonville, Markham, after a year-long struggle. Despite extensive efforts to lease it, no tenant could be found, and the seller ultimately had to accept a 50% price reduction just to complete the sale. Although the property had been held for over 20 years, the seller barely made any profit in the end. Owning office buildings or office condos in Markham could become a major liability if vacancies continue to rise.

Small retail units have also been heavily impacted by the rise of e-commerce. Post-pandemic consumer behavior increasingly favors online shopping, while higher operational costs squeeze small businesses further. Although prime restaurant locations are still in demand, many plazas with lower foot traffic are struggling. Owners of small commercial properties in less ideal Markham plazas or along quieter street fronts may face declining rents, longer vacancies, and pressure on property values.

Although Markham is building a York University campus, the broader trend is worrying. With Canada’s job market weakening, the country’s appeal to international students is diminishing. Many families who previously offered homestays are now seeing a shortage of students due to the reduced inflow of international arrivals. Meanwhile, around the York University site, UnionCity Condos Phase 3 is launching, adding to an already substantial supply, with all three phases totaling 1,360 units. Purpose-built student housing may not see the level of demand many investors had anticipated, and values in this segment could stagnate or fall.

Pre-construction condos present another significant risk in a declining market. Many buyers have already faced negative equity situations as final valuations come in lower than initial purchase prices. In Markham, where new condo projects continue to launch aggressively, careful evaluation is critical. If holding a pre-construction unit stretches your finances, it may be better to consider exiting or reassigning early to avoid larger losses.

Warehouses and storage facilities, once seen as safe investments, are not immune either. Global supply chains are undergoing major restructuring. Rising tariffs, reshoring trends, and a slowdown in cross-border trade with the U.S. are weakening the long-term demand for warehousing. In Markham, a rush of warehouse construction is underway, including the conversion of Buttonville Airport into industrial use. This flood of new supply could mirror what has happened with pre-construction condos in downtown Toronto, an oversaturated market with weakening investor appeal and growing risks of falling values.

The coming years will test Canadian homeowners and investors. Rising tariffs, ongoing geopolitical uncertainty, slower immigration, and tighter lending standards are reshaping the landscape compared to the boom years of the past decade. In Markham, housing prices are expected to face continued downward pressure, particularly for high-end and discretionary properties. Detached homes and luxury real estate will likely see a corrections. Entry-level homes in convenient locations, affordable rental units, and properties near transit and good schools are expected to perform relatively better, as many have already experienced noticeable price declines.

 

Instead of focusing on "what is best," it’s time to focus on "what is essential": good locations, strong liquidity, stable rental income, and low operating costs. Properties that meet these criteria will offer better protection in an uncertain economy. Those that don’t should be reconsidered, before your financial situation forces the decision for you.

 



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