Fear Of Missing Out (FOMO) is a buzz word in the Canadian real estate market right now.  The meaning of FOMO is having social anxiety or apprehension of not knowing. Sometimes, it is even considered as fearing that you are going to miss out on some information.

The recent real estate market changes may be making many feel as though they are miss out on a happening experience by being inactive or taking too long to make a decision. It may also be making people re-think the home they are currently living in. Asking questions like:

Is this place worth living in? I require more room for sure. Is there a need for a backyard? I really don’t like those elevators, and now I despise them. Should I be living downtown? Is returning to office impossible forever? Maybe work from home isn’t that unpleasant as I initially thought it would be.

The pandemic has been a massive reason for inducing FOMO in the housing market; it has become a raging monster among property buyers. Many fear missing out on the relative affordability of the housing market in the smaller sector. And this is in relative terms for sure.

Although the second wave of pandemic didn’t deter the hopeful buyers as they were buying homes in large numbers. It was the basis of increasing the home resales in Canada to a record level. Historically low-interest rates, change in the needs of buyers, household savings hitting peak heights and uncertainty about increasing home prices that will diminish affordability in times to come. All these reasons play a key part in a continuous show of interest from the buyers for availing homes.

Robert Hogue, the senior economist from RBC, has gone on record in terms of stating that the buyers are selecting homes from existing inventories in the marketplace most times because new listings have come down by 13% in Canada till now this year.

He says that the demand is consistently growing, exceeding the number of homes for sale since summer. Therefore, many countries are running low on inventories. It is the case, especially for single-family homes. It will soon curb activity while still having the heat intense.

Various factors make a tangible impact on the Canadian real estate market in the year 2021, believes Hogue. Buyers' competition, FOMO and shortfall in supply increasing housing prices are the standouts.

As there are a few housing units available, the bidding wars will intensify and stay around for a long time, as per Hogue. There was intense buyer competition to bolster the housing prices at a fast rate since the mid-2017 levels in the nation (more than 13% a year by year upward curve in the MLS Home Price Index).

Hogue states that RBC's expectation is for more acceleration in prices in the next few months. In the smaller markets in Central Canada and the Atlantic region, there have been big increments happening, and they are still getting buyers from large markets regularly.

According to Hogue, the attention of the big city buyers has been soaring in smaller markets due to the pandemic. It’s because the work from home culture has made it simpler for workers in the city to go outside of downtown for a very affordable and capacious housing option. Also, Hogue says that this phenomenon looks “more like a rush” due to the rapid surge in the smaller market pricing.

Hogue categorically says that the relative affordability of fear of missing out has developed. As a result, you can see a loop-like pattern where the FOMO-motivated people keep pushing the rates higher thereby cranking making the ‘buy now’ option unaffordable. Furthermore, he mentions that these dynamics are a basis for attracting speculators who tend to heat things more.

Hogue believes that the issue of affordability will soon challenge the communities in Canada because the prices are rising more than 20% from last year in all the small southern Ontario, parts of Quebec, and Atlantic Canada markets.

This brings pressure on the policymakers in the Canadian housing market to do something very soon. Increasing the supply of affordable housing is the long-term solution to these issues in the market. With that, Hogue says that you could see some cooling off of the demand with some form of induced policies increasing in the next few months is his expectation. 


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