I caught a fascinating development yesterday that could shift the landscape for Vancouver’s housing crunch—Vancity Credit Union is rolling out specialized financing specifically targeting missing middle housing.
For anyone following Canada’s housing saga, this feels significant. Vancity’s new construction mortgage program aims to make it easier to build small-scale multi-unit housing, precisely the kind of “missing middle” development urban planners have been advocating for years.
The timing couldn’t be more relevant. Just last week, I was speaking with a local developer who described financing as the “invisible wall” preventing multiplex construction, even in neighborhoods where zoning now permits it.
“The traditional lending framework simply wasn’t designed for small-scale developers looking to build three to six units on a single lot,” explained William Azaroff, Vancity’s Chief Member Experience Officer. “We’re adapting our approach to match how housing policy has evolved.”
The program offers construction financing for projects ranging from duplexes to sixplexes, covering up to 80% of the project’s cost with terms extending to 24 months. What caught my attention was the credit union’s willingness to work with first-time builders—typically seen as higher risk by conventional lenders.
Canada Mortgage and Housing Corporation data shows multiplex permits have increased 27% since 2021 in Metro Vancouver, but completion rates lag significantly behind. The gap between approvals and actual construction suggests financing barriers remain substantial.
This initiative arrives as Canadian housing starts recently hit their lowest level since 2020, according to the latest CMHC housing report. Vancouver, despite its housing crisis, has struggled particularly with the “missing middle”—housing that bridges the gap between single-family homes and large apartment complexes.
I spoke with urban economist Jens von Bergmann, who cautioned about overly optimistic expectations. “Financing is certainly one barrier, but construction costs, permitting delays, and skilled labor shortages remain significant challenges,” he noted. “This is a positive step, but we need parallel solutions addressing those obstacles.”
What makes Vancity’s approach interesting is how it connects with broader policy shifts. The federal housing announcement earlier this year emphasized missing middle development, and municipalities throughout Metro Vancouver have been gradually reforming zoning to allow multiplex construction.
The program contains some notable limitations. It’s currently only available to borrowers in the Lower Mainland and Victoria regions, though Vancity indicates they may expand based on initial results. Additionally, the maximum loan amount caps at $2 million, which in Vancouver’s expensive construction market could limit the scope of eligible projects.
For potential applicants, the documentation requirements remain substantial. Borrowers must submit detailed construction plans, cost breakdowns, and demonstrate relevant experience—though Vancity says they’ll consider partnerships where experience gaps exist.
The Financial Post recently reported that traditional lenders have been hesitant to finance missing middle projects due to their hybrid nature—neither conventional single-family construction nor large-scale multi-unit development with established risk models.
“Credit unions can sometimes be more nimble in addressing market gaps,” explains Tsur Somerville, a real estate finance professor at UBC’s Sauder School of Business. “They’re member-driven organizations with local focus, so they can pioneer solutions that might eventually be adopted by larger institutions.”
For everyday Vancouverites watching housing costs spiral upward, initiatives like this represent a small but concrete step. A recent RBC report showed Vancouver’s housing affordability reached its worst level in decades this past quarter, with the average household needing to allocate over 60% of income toward housing costs.
The true test will be how many projects actually materialize through this program. Vancity has committed $30 million initially, which might support roughly 20-30 projects depending on their scale. For context, Vancouver would need thousands of such projects to meaningfully address its housing shortfall.
Looking ahead, this approach could create a template for other financial institutions. Canada’s six largest banks have faced mounting pressure to develop specialized products addressing the housing crisis.
As someone who’s covered the housing beat for years, I’ve noticed how financing innovations often follow policy changes with significant lag time. Zoning reforms permitting multiplexes have been implemented across various municipalities, but the financial infrastructure to support them has evolved more slowly.
Will this move the needle on Vancouver’s housing crisis? Likely not on its own. But combined with density bonusing, permit streamlining, and other initiatives underway, it represents another piece of the complex puzzle.
For those considering such projects, Vancity begins accepting applications next month. The true measure of success will be visible in about two years—when we can count the new homes that might otherwise never have been built.
