The recent CMHC report revealing a 56 percent decline in Vancouver’s middle-density housing construction between 2018 and 2024 signals a fundamental shift in our city’s real estate landscape. This dramatic drop from 2,300 units to just 1,002 represents more than just statistical data—it reflects a critical imbalance in our housing market that directly impacts affordability, mortgage accessibility, and long-term investment strategies. As mortgage rates continue to fluctuate in response to broader economic conditions, the scarcity of these ‘missing middle’ housing options creates significant challenges for first-time buyers, young families, and downsizing seniors seeking alternatives to detached single-family homes or high-rise condominiums. This trend demands closer examination from both a policy perspective and an individual financial planning standpoint.
The contrast between Vancouver’s performance and other Canadian cities is particularly telling. While Vancouver experienced this significant decline, the six cities surveyed collectively showed a five percent increase in middle-density housing starts between 2018 and 2023, followed by a remarkable 44 percent surge in 2024 alone. This divergence suggests that Vancouver’s real estate challenges are not universal across Canada but stem from unique local factors. For mortgage professionals and financial advisors, this highlights the importance of understanding regional market dynamics when advising clients on property investments or home purchases. The divergent trajectories also indicate that what works in one market may not translate to another, reinforcing the need for localized financial strategies in Canada’s diverse real estate ecosystem.
The concept of ‘missing middle’ housing encompasses multiplexes, row homes, stacked townhouses, and low-rise apartments—all crucial components of a balanced housing ecosystem. These options typically offer more affordability than single-family homes while providing more space and privacy than traditional high-rise condominiums. From a mortgage perspective, these properties often present favorable loan-to-value ratios and can be attractive to a broader range of borrowers. Their decline in Vancouver has created a bottleneck in the housing continuum, forcing many buyers into either unaffordable detached homes or cramped condominiums, neither of which represents optimal financial positioning for the average household. This compression of options has profound implications for mortgage default rates, household debt levels, and overall financial stability.
The COVID-19 pandemic clearly exacerbated Vancouver’s middle-housing construction challenges, with starts plummeting to just 929 units in 2020—the lowest point in the reported period. This decline coincided with unprecedented shifts in remote work preferences, migration patterns, and interest rate environments, creating a perfect storm of market disruption. For mortgage lenders, this period highlighted the importance of scenario planning and stress testing loan portfolios against economic volatility. The pandemic demonstrated how quickly market conditions can change, underscoring the need for both borrowers and lenders to maintain financial flexibility. As we move into a post-pandemic era, understanding these historical patterns becomes crucial for anticipating future market movements and advising clients on appropriate mortgage strategies.
Vancouver’s recent policy responses—including the 2023 zoning amendments allowing up to eight-unit builds on single-house lots and the provincial government’s elimination of single-family home zoning—represent significant attempts to address the missing middle housing shortage. These changes could potentially unlock new opportunities for developers and create more housing options for middle-income households. From a mortgage perspective, such zoning reforms could increase housing supply and moderate price growth, potentially making homeownership more accessible to a broader segment of the population. However, the CMHC report’s observation that high land costs continue to reduce viability suggests that policy changes alone may not be sufficient without complementary measures to address the fundamental economics of development in expensive urban markets.
The financial mathematics of missing middle housing development in Vancouver present particular challenges. High land values in desirable neighborhoods can make smaller-scale projects economically unviable, especially when factoring in construction costs, regulatory expenses, and financing charges. This creates a financing gap that traditional mortgage products may not adequately address. For developers, this means seeking alternative financing arrangements or focusing on more lucrative high-density projects. For policymakers, it suggests the need for innovative financial incentives or density bonuses that can tip the scales in favor of middle-housing development. Understanding these economic constraints is essential for anyone seeking to navigate Vancouver’s real estate market, whether as a developer, investor, or prospective homeowner.
The projected recovery in Vancouver’s missing middle housing construction—with 1,572 units expected by the end of 2025, bringing the city back to 2022 levels—offers a cautiously optimistic outlook. This potential rebound suggests that recent policy changes may be beginning to take effect, creating more favorable conditions for middle-density development. For mortgage professionals, this trend could signal new opportunities in construction financing, as well as potential refinancing scenarios for property owners looking to develop accessory dwelling units or convert single-family properties into multi-unit complexes. The gradual return to pre-pandemic levels also indicates that the market is finding a new equilibrium, though one that remains significantly below the construction rates seen in 2018. This stabilization could provide more predictable conditions for long-term mortgage planning and investment strategies.
The dominance of Calgary and Edmonton in middle-density housing construction—accounting for 67 percent of all starts across the six studied cities—offers valuable insights into what drives successful housing development in the Canadian context. These cities have benefited from strong interprovincial population growth, robust rental demand, and a notable shift toward rental construction. From a mortgage perspective, this suggests that rental-focused development may offer more viable financing pathways than traditional ownership models in certain markets. The CMHC report’s observation about “abundant land availability and a lower regulatory burden” in these cities highlights how market fundamentals can influence development decisions. For Vancouver and other constrained markets, understanding these success factors could inform policy approaches aimed at making middle-housing development more financially attractive.
The relationship between missing middle housing and mortgage accessibility represents a critical intersection of housing policy and financial services. When these housing options are scarce, potential buyers face limited choices, often forcing them into either high-priced single-family homes they can barely afford or condominiums that may not meet their long-term needs. This constraint can lead to stretched mortgage payments, increased household debt, and greater financial vulnerability. Conversely, when missing middle housing is available, it provides a stepping stone for first-time buyers, offers flexibility for growing families, and creates options for downsizing seniors. A robust middle-housing sector can therefore contribute to more sustainable mortgage portfolios, reduced default rates, and healthier overall household balance sheets. This connection underscores why housing policy should be considered an integral component of financial regulation and consumer protection strategies.
The seasonal patterns in Vancouver’s middle-density housing construction—evidenced by the 785 starts recorded in the first half of 2025—provide valuable insights for mortgage originators and real estate professionals. Understanding these cyclical fluctuations can help with timing market entry, managing construction financing, and advising clients on optimal purchase timing. The data suggests that while Vancouver is recovering from its pandemic-induced slump, the market remains sensitive to seasonal variations and broader economic conditions. For mortgage lenders, this means being prepared for fluctuating application volumes and potential shifts in borrower profiles as the missing middle housing sector evolves. Financial advisors should similarly factor these patterns into their clients’ long-term planning, recognizing that market opportunities may vary throughout the year.
The long-term implications of Vancouver’s missing middle housing shortage extend far beyond immediate real estate transactions. As the city continues to grow and evolve, the availability (or lack thereof) of these housing options will shape community development patterns, infrastructure investment decisions, and overall economic competitiveness. From a mortgage perspective, this means considering not just immediate financing needs but also the long-term value proposition of properties in neighborhoods with constrained housing options. Properties in areas with limited middle-density housing may experience different appreciation patterns and offer distinct investment characteristics compared to more balanced markets. Understanding these long-term trends can help borrowers make more informed decisions about mortgage term selection, prepayment strategies, and overall wealth accumulation through real estate ownership.
For Vancouver’s housing market to achieve greater balance and sustainability, a multi-faceted approach is required that addresses both supply constraints and financing challenges. Potential buyers should consider exploring emerging neighborhoods where missing middle development is gaining traction, potentially offering better value and more financing flexibility. Current homeowners might evaluate opportunities to develop accessory dwelling units or convert single-family properties to multiplexes, creating additional income streams or housing options for family members. Mortgage professionals should stay informed about policy changes and market trends that could create new financing opportunities in this sector. Ultimately, the recovery of Vancouver’s missing middle housing market will require collaboration between policymakers, developers, lenders, and consumers—all working toward the shared goal of creating a more accessible and balanced housing ecosystem for our city’s diverse population.
