Fear is a funny thing.

It can paralyze you and it can make you move forward.

When it comes to real estate, fear is what some believe is keeping the buyers buying. In fact, fear is the first word in one of the latest and timely real estate acronyms, FOMO. FOMO, or Fear Of Missing Out, is a term that is often applied to buyers who feel they must buy a property, right now with no delay, before prices rise to the point where they cannot afford to buy the kind of property they want. For a FOMO, waiting to buy real estate is an expensive way to pass the time.

I think many bloggers and pundits use the term FOMO to suggest that emotion is taking over in many parts of the Toronto real estate market and preventing buyers from making a rational decision. Emotion, it is often believed, runs counter to reason and logic, traits that could be very helpful in a real estate transaction. The term FOMO is often used in a way to suggest that FOMOs are rushing into buying things they cannot afford or have not carefully considered. And if that is the case, then being a FOMO is not such good thing.

Still, if I look back on the market over the past fifteen years, there is no denying that the emotional FOMO has used fear to his or her advantage. They have financially benefited from their fear of missing out. Not always of course. Prices did dip a little in 2008, and for some condos, even a while past 2008, but for the most part this fear did contribute to making a financial decision that, to date, has really built equity and wealth. Even over the past year the concept of being a FOMO has proved to be advantous. For the average Toronto detached house, prices have gone up $550/day from last April to this one according to the Toronto Real Estate Board.

If detached homes are your thing, then you are losing money by the day if you are waiting to buy.

Waiting has never been so expensive.

It’s not just about the fear of losing out when it comes to detached homes. The fear of losing out can be applied to neighbourhoods as well. When we look at neighbourhoods over the years like the Junction we see an emerging neighbourhood that was once the outlier of neighbourhoods, not central enough for subway access, a dreary main street and houses in need of a lot of work. Now the Junction is one hip hood. It is more of a destination than other neighbourhoods in the city. It’s a place to visit, eat, drink and indulge in urban village living. And the transformation was fast. Of course the Junction is not the only neighbourhood that has changed from an early emerging neighbourhood that is good for a first time investor to go to a late stage emerging neighbourhood with million dollar homes near decent schools and community-based neighbourhoods. The Junction will continue to improve and be a strong place for investment. It’s not the only neighbourhood, though, to go from early emerging neighbourhood to late emerging neighbourhood. There’s also Leslieville, Mimico, and the Junction Triangle.

For the FOMOs who are first time buyer and want a house, the neighbourhoods to get in early are now further out, but ready for their transition. The West St. Clair communities going west from St. Clair and Dufferin up to Eglinton are emerging now. The western portion of Eglinton where the Eglinton Crosstown is currently under construction is a great spot for first time buyers. There’s Weston and Mount Dennis  and Oakwood-Vaughan that are coming along nicely. Out east, the Danforth Village is still first timer territory in the east. If you really want to get in cheap, then Hamilton has some of the most affordable houses ready for a gentle gentrification and some walkable local coffee shops and restaurants.

If you are one of those buyers who have the Fear of Missing Out but have yet to buy anything, then you may be feeling a bit down. Prices are charging ahead in all of Toronto, with no sign of retreating. On top of that, there’s no sign of alleviating the chronic state of the limited supply of houses, and in some neighbourhoods limited supply of townhouse condos and smaller, boutique style condos.

But there may be a silver lining…

And here I want to put the emphasis on silver. Because there is another term kicking around in real estate circles, and it has to do with the Baby Boomer demographic. Right now many Boomers hold a lot of real estate in Toronto, and they are on the cusp of retiring. Some have already retired. Since the Boomer demographic is so large, the idea of all of them retiring at the same time can be overwhelming effect like a tsunami. This is how the “silver tsunami” arrived at its name.

There is some thought that the Boomers will sell all of their property at the same time. And if they do, then we will see our chronic shortage of houses come to a close, and perhaps even see an oversupply on the market. Of course, there is no guarantee that the silver tsumani will be in the forecast. There are many reasons the Boomers will not have the impact in Toronto many anticipate. Some of these reasons are:

1. Carried Out in a Box – They will retire and stay in their homes. It would not be the first generation who would say: :”The only way I’m leaving this house is if I’m carried out in a box.”
2. Kids Are Alright – There is also the possibility that Boomers may not sell their homes at all. They may simply pass it along to kids who cannot afford a house in the current market. Mom and Dad can stay as long as they can, and pass the house on in their wills once their gone.
3. It Doesn’t Matter – Even if the Boomers sell their houses in Toronto, there will be enough demand for houses that it won’t effect prices very much.

We still have certain truths in Toronto that will not be effected by the Boomers. The city is growing and we do not build very many houses any longer. This chronic undersupply of houses could be difficult to change. However it plays out, the Boomers do have a lot of their wealth tied up in real estate, and may be more likely to cash out of their houses to spend the money while they enjoy their retirement. And really, who could blame them?

If you are reading this and you have identified yourself as a FOMO, don’t panic! Your fear of rising prices may be very real according to the current state of the Toronto real estate market, and it may guide you to move quickly. I would say that if you are going to move quickly just make sure you have your finances lined up and you can afford what you are buying, whatever direction the market will take, and have the right strategy of landing a home. Here is one strategy you could try with regard to the Spillover Effect.  Know what you are getting into and know where your limits lie. It’s okay to be afraid, but you should be smart about it too!