You may have heard of FOMO before – the Fear Of Missing Out.
It typically applies to social situations and cultural phenomena, but these days, another source of FOMO is the current sellers’ market or Seller FOMO. Many people have seen record-high selling prices, alongside fierce bidding wars and contingency waivers because inventory is so low.
Every month we post a detailed housing market update for both Seattle and Snohomish County that you can view here:
While many people may have been happy with their current home before the pandemic, there have been major changes in satisfaction due to the big shifts in family and work life. There is also the fear that these kinds of prices are a bubble, which could burst or slowly deflate when supply chains even out in the coming months and years.
So who is most likely to be feeling the FOMO right now, and what do top real estate agents think they’re going to do in response? Here are some possibilities.
People Tracking Interest Rates
Anyone who is on the fence about selling their home may decide to go ahead and list when interest rates rise. After all, rising interest rates could reduce the amount of home buyers on the market, taking less of the competitive bidding out of the current market.
While this could be a sound economic choice in the coming months, it does spell the end of an individual homeowners’ dream of getting a pile of big offers. They may choose to list in response.
Ironically, more people listing when interest rates are rising could be a key to unlocking inventory and kickstarting a more normal cycle of supply and demand in real estate.
Younger First-Time Homeowners With Their First “Big Break”
The old wisdom has always been that selling in the first few years after buying your first house really diminishes the potential for building equity, often leaving the buyer no better than he or she started.
These days, however, many homes have seen such a boost (on average, more than 13% since last year), that new homeowners who are only a year to three years into their mortgages are selling and still walking away with thousands of dollars of profit for their efforts.
In fact, we just completed a CMA (Comparable Market Analysis) for our clients who bought a townhome exactly 1 year earlier and needed to move back to their hometown. They are going to net a fairly significant profit in 1 year. I explained that normally we would be talking about how to mitigate their losses but that prices increased so much this year that they would still be seeing a profit.
While it flies in the face of the traditional wisdom, one way that FOMO could unlock our market is with more of these younger first-time homeowners jumping into the market in order to get the kinds of windfalls their companions are getting before the seller’s market slows down.
Near-Retirees and Other Empty Nesters Ready to Downsize
Getting out of a larger home can be a strong financial move for many near-retirees, and the sellers market nearing its end could cue near-retirees to cash in.
Empty nesters who no longer want to heat and cool spare bedrooms that aren’t getting used any more even as offices could choose a cooling sellers market as a time to go ahead and find their retirement homes.
Seller FOMO Summary
If you are currently a homeowner their does not need to be any fear about selling. We have been in a seller’s market for a number of years now and it does not seem to be changing any time soon.
Yes, if we are in a sellers market than it may not be the best time to buy, but if you are selling in a great market and buying in a tougher market you are going to even out.