Be afraid. Be very afraid.
Oh, hold up – never mind – you already are.
There’s a global phenomenon that has always existed but is now taking a more coherent form and making itself known – the fear of missing out, or "FOMO".
These days, it is such a pervasive cultural norm, it even has its own hashtag.#FOMO
We’ve all felt it in one way or another: not committing to plans in case you miss an awesome last-minute get-together; lining up for hours at a massive designer shoe sale; delaying your response to a job offer in case a better one comes along, and so on. And thanks to social media, through which we all watch everybody else documenting their seemingly fabulous lives, our own insecurities and anxieties are only heightened. It is human nature to search for inclusion, to mimic the perceived greatness of those around us.
And it seems that this is also the case in the current Vancouver real estate market. With home prices going up an up at a seemingly unstoppable rate and no discernable end in sight, many would-be home buyers, especially those previously sitting on the fence, are jumping feet-first into the market. They’re thinking, “Everyone else is doing it, and if I don’t do it now, I might be left behind forever.”
And who knows? They may be right.
An April-released survey by TD Bank found that a surprisingly high 19 per cent of home owners in Vancouver and Toronto listed FOMO as a top factor before they made their first home purchase. Additionally, prospective first-time buyers across Canada said they are concerned about rushing the process to avoid missing an opportunity (20 per cent), being pushed out of the market (13 per cent) and/or buying too fast in order to win a bidding war (18 per cent).
And then last week, Urban Analytics wrote in its quarterly State of the Market report for the Urban Development Institute, “Anecdotal analysis would suggest that the robust sales activity in the [Metro Vancouver] real estate sector of late can also be attributed to a ‘fear of missing out’ sentiment among prospective buyers in the marketplace.”
It’s certainly true that home sales in Metro Vancouver are through the roof so far this year, in pretty much all neighbourhoods, and across all housing types and price points. While it is definitely feasible that some of this frenzied activity can be attributed to increased overseas immigration and investment, especially in toney single-family neighbourhoods, as well as the considerable trickle-through effect of those sales, it seems to me that this cannot completely account for the vast numbers of properties changing hands throughout the region.
So then, if FOMO is at least partially contributing to the rise in sales (and therefore prices), it becomes a self-fulfilling prophecy. An upward spiral of people being afraid of missing out because prices keep rising, so they enter the market, so prices keep rising.
And it makes sense to do this. Even without the FOMO factor’s influence, with all the other factors in play, it is likely that the market will continue its upward trajectory, especially in the long term. It is probable that many people, unfortunately, will miss out if they don’t, or can't, board the Vancouver real estate train.
On the flip side, there are still many people refusing to bow to FOMO's pressure, staying out of the fray, perhaps suffering buyer fatigue, perhaps hoping the market will correct itself. That's another form of fear – the fear of getting sucked in, of paying too much, of a price crash right after you pay through the nose for a property.
The real problem, though, is when it is fear that dictates your move, rather than logic. When it becomes just about getting into the market at any cost, and no longer about buying a home that is right for you. It can cause a buyer to overbid in a bidding war, which gets them into a situation they can’t afford, as well as having the wider effect of pushing prices up still further.
My recommendation to buyers? Know that while there is an understandable reason for all the FOMO in Vancouver's real estate market, that fear cannot be what drives you to buy a home. Despite what it may seem, there is still a lot of real estate inventory in Metro Vancouver at affordable price levels. Work out your comfortable price point (the one that leaves you with some wriggle room), adjust your expectations if necessary and maybe embrace the idea of life in a smaller home or less salubrious neighbourhood while you build up equity, and find the home that works for you.
And above all, don’t worry about what everyone else is doing. This is your life, and your home, not theirs.