The price of FOMO.
By Wolf Richter for WOLF STREET.
Here is a Reddit lament by a self-admitted FOMO-home-buyer in Canada. The couple, mistakenly thinking that working-at-home (WAH) was permanent, had bought for that reason a house “hours away” from Toronto six months ago. But turns out, WAH was transitory for them, and now they need to sell the house.
But in the two weeks that the home has been on the market, they didn’t get offers that would allow them to make a profit or break even, as the market is cooling – a horrifyingly bloodcurdling stupendously surprising situation of having to sell a house without being able to make an instant profit.
And they can’t even rent out the house profitably in their estimates. What kind of horror show is this??
This is the horror show of having bought a house in what has been identified as the #2 Housing Bubble in the world, behind New Zealand, and now this housing bubble is “normalizing,” or “cooling,” or whatever, and suddenly the plans go kaput.
Obviously, the couple can sell the house. But they’ll have to price it to where the market is, and the market isn’t where they thought it would be, or where it was six months ago, and they’ll have to try harder and longer and cut the price, and eventually they’ll be able to sell the house. But the dream of making C$100,000 or whatever in six months on flipping a house “hours away” from Toronto have evaporated.
The post was brought to my attention by Steve Saretsky, a Realtor in Vancouver, whose work, reports, and data have appeared on WOLF STREET. Also note the post’s terse marital nuances that come with a situation like this — “she’s livid about the situation and refuses to live here now,” he says:
“Sorry if this is horribly formatted, I’m not a redditor.
“My wife and I bought 6 months ago at the height of the housing market it seems now. We bought hours away from work (Toronto) as we both were working from home. We thought WAH would be permanent and we were both afraid of missing out on buying if we didn’t pull the trigger. Wife is being called back to work full time. I’ve been given notice that we’re going back part time come September.
“We listed our house a bit over two weeks ago, no offer has come in that we break even on let alone profit. Our realtor has told us the market is cooling and that it would be a surprise if we got what we were asking for. We’ve gotten a couple of offers, none of which are asking price.
“We’re at a loss. My wife is looking for work locally but due to the nature of her work she is unlikely to find equivalent in pay or opportunity. She also doesn’t want to leave her employer, she has great upward mobility and seniority there. I don’t personally mind commuting part time but she’s livid about the situation and refuses to live here now.
“My friends keep telling me that there is no such thing as a Canadian market cooling and to just wait it out until it sells.
“If we listed for rent I think we wouldn’t be making a profit.
“Any suggestions would be appreciated.”
What’s amazing to someone like me who has been around the block too many times is the naiveté and the surprise displayed in these eloquent words by the perplexed and frustrated potential home seller. What were they thinking when they bought the house?
They weren’t thinking. They were governed by the fear of missing out (FOMO), and the poster admitted it. FOMO stipulates that you stop thinking, and that you act without thinking, and act now before someone else snaps the overpriced house out from under you. A housing bubble operates on that basis. You cannot maintain a housing bubble without FOMO.
The post also lays bare the whole conundrum of buying a nice big house somewhere far away from the city because now you can work at home, both of you, and then the bosses say, both of them, no, you gotta come back to the office. This stuff really sucks. And I suspect that there’s going to be a lot of it.
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