An often overlooked alternative to the standard mortgage lending process in Vancouver, British Columbia, private financing is a worthwhile consideration for acquiring funding for real estate investment.  Many residents in the city are all too familiar with the challenges associated with breaking into the real estate market – prices and competition is high, and financing can be difficult to arrange.  Still, when weighing the costs and benefits of renting versus purchasing, home owners will tell you that buying your property means money is ultimately going into your own pocket as you pay off a mortgage and build equity.

Getting a mortgage approved can certainly be a deterrent to some folks who would prefer to purchase property.  If you’ve ever been concerned that you would not get approved for a mortgage in BC, private financing might be the alternative you need.  Banks and other conventional lenders often have a much more stringent mortgage lending process, particularly since the real estate market took a huge hit in 2007 and banks were left holding the bag.  Banks poor lending practices and inadequate approaches to due diligence ultimately resulted in consequences for borrowers too, and in today’s competitive real estate market it is much more challenging to get a mortgage.

Fortunately, private lenders in BC represent a growing network of mortgage lending services that are available to the public whether they’re looking to purchase their own home or to invest in local real estate.  Private financing companies in BC often offer attractive mortgage rates and reasonable lending requirements.  Typically, approval for private financing requires that borrowers have around 15 percent to put toward a down payment, while higher down payments (such as 20 or 25 percent) are preferred.  In addition, evidence of a stable income over the past 12 months or more.  Satisfying these two conditions is often all you’ll need to get private financing in BC. 

Credit scores and credit history are not a major concern as private lenders are more interested in your current credit standing rather than a history that can be explained by predictable life circumstances.  In fact, private lending can often help borrowers rebuild their credit score while they also build home equity.  Even though interest rates for private financing are usually a little higher than banks, the equity you build and the money you save by investing in your own home will well outweigh the costs of increased interest payments.  Then, after a couple of years on a private mortgage and an improved credit score, you can seek lending through traditional banking options and reduce your interest rates. 

For many borrowers, private lending in BC is an attractive choice that can help them get into a home, improve their credit history, all while keeping money in their own pockets.

Home buyer demand continues to differ based on housing type

Apartment and townhome activity is outpacing the detached home market across Metro Vancouver*. This activity helped push total residential sales above the historical average in September.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 2,821 in September 2017, a 25.2 per cent increase from the 2,253 sales recorded in September 2016, and a 7.3 per cent decrease compared to August 2017 when 3,043 homes sold.

Last month’s sales were 13.1 per cent above the 10-year September sales average.

“Our detached homes market is balanced today, while apartment and townhome sales remain in sellers' market territory,” Jill Oudil, REBGV president said. “If you’re looking to enter the market, as either a buyer or seller, it’s important to understand these trends and use this information to set realistic expectations.”

There were 5,375 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2017. This represents a 12 per cent increase compared to the 4,799 homes listed in September 2016 and a 26.6 per cent increase compared to August 2017 when 4,245 homes were liste

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,466, a 1.2 per cent increase compared to September 2016 (9,354) and a 7.5 per cent increase compared to August 2017 (8,807).

“Detached homes made up 30 per cent of all sales in September and represented 62 per cent of all the homes listed for sale on the MLS®,” said Oudil. “This dynamic has slowed the pace of upward pressure that we’ve seen on detached home prices in our market over the last few years.”

For all property types, the sales-to-active listings ratio for September 2017 is 29.8 per cent. By property type, the ratio is 14.6 per cent for detached homes, 42.3 per cent for townhomes, and 60.4 per cent for apartments.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,037,300. This represents a 10.9 per cent increase over September 2016 and a 0.7 per cent increase compared to August 2017.

Sales of detached properties in September 2017 reached 852, a 27.9 per cent increase from the sales recorded in September 2016 (666), a decrease of 33 per cent from September 2015 (1,272), and a decrease of 32.9 per cent from September 2014 (1,270). The benchmark price for detached properties is $1,617,300. This represents a 2.9 per cent increase from September 2016 and a 0.1 per cent increase compared to August 2017.

Sales of apartment properties reached 1,451 in September 2017, a 19.1 per cent increase compared from the sales recorded in September 2016 (1,218), a 5.1 per cent decrease from September 2015 (1,529), and a 22.1 per cent increase from September 2014 (1,188). The benchmark price of an apartment property is $635,800. This represents a 21.7 per cent increase from September 2016 and a 1.4 per cent increase compared to August 2017.

Attached property sales in September 2017 totalled 518, a 40.4 per cent increase compared to the sales recorded in September 2016 (369), a 4.8 per cent decrease from September 2015 (544), and an 11.6 per cent increase from September 2014 (464). The benchmark price of an attached home is $786,600. This represents a 14.5 per cent increase from September 2016 and a 1.1 per cent increase compared to August 2017.

Click here to download the September 2017 stats package