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Two photographs of two young women sitting in their living room couches
From Left: Krystle Harvey; Talaya Waller by Jean Marc Photos

FOMO is a powerful thing — sometimes powerful enough to spur a life-changing decision like buying a house, selling a property or refinancing a mortgage.

It sounds crazy, but in today’s red-hot housing market, Fear Of Missing Out is a real influencer.

Just take Sabrina Beaumont, the chief marketing officer for Passion Plans, a floor plan design company based in California. Beaumont had been looking “half-heartedly” for a house for almost two years, but when the pandemic hit and her friends started buying homes left and right, she decided to get off the sidelines and take action.

“I will admit that FOMO took over for me,” says Beaumont. “It really set in when my best friend bought her house.”

Beaumont quickly found herself up against steep competition. While she ultimately found and bought a property, she says buying at such a hot time cost her $30,000 and about 400 square feet.

“I should have bought one of the houses I looked at in the past, and now I regret not doing it,” she says. “I ended up getting into a bidding war and bought a house that was smaller and more expensive than ones I had previously looked at. I feel stupid about the situation.”

Feverish home sales and a fear of missing out

Housing inventory is currently at record-setting lows, and it’s made buying a home more competitive than ever. According to real estate brokerage Redfin, nearly three-quarters of all offers faced bidding wars in April. Even scarier? The average home is selling in just 18 days — the quickest pace ever recorded.

In a market as fast-moving as today’s, feelings of FOMO — and regret like Beaumont’s — are common.

“Low inventory is causing fear amongst those who are willing and able to buy,” says Dana Bull, a realtor with Sotheby’s International Real Estate in Boston. “Will more homes ever come available? Scarcity creates fear, and people are gobbling up homes that they may not even love just to secure something.”

It’s not just buyers who are vulnerable to FOMO, though. It’s happening on the selling end, too.

As Bull puts it, “They’re seeing neighbors and friends make huge gains when listing their homes and are debating whether they should take advantage of the opportunity. They fear this might be as good as it gets and should strike when the iron is hot.”

Talaya Waller is a perfect example. When two of her neighbors made a mint on their Washington D.C. condos last year, it pushed her to jump into the market, too.

“Selling was definitely a combination of FOMO from my neighbors and having to exist in my home more due to pandemic restrictions,” says Waller, a brand strategist and consultant. “Both of my neighbors made over $100,000 from their home sale.”

Unfortunately, she wasn’t the only one who hopped on the bandwagon, and a flood of similar properties hit the market just as hers did.

Though she wasn’t able to make as much as her neighbors, Waller’s FOMO didn’t steer her in an entirely wrong direction. She took home $70,000 on her condo sale and is using the profit to buy a larger property.

For those not ready to sell, FOMO has also inspired its fair share of refinances. Krystle Harvey, who refinanced twice in 2020, says FOMO was a key player in her decision — especially the second time around.

“I wish I could say I made the decision based solely on math, but if I'm being honest, FOMO played a role,” says Harvey, a marketing coordinator for Walsh & Associates, a wealth management firm based in Florida. “I watched friends and colleagues buying new homes or refinancing, and I kept hearing about low interest rates in the news.”

Headlines about a new refinancing fee, which added 0.5% to the cost of all refinances after December 1, also pushed her to refinance a second time in October.

How to avoid a housing decision you'll regret

You're not alone. With homes selling at such a feverish pace and interest rates at near-constant lows, it’s pretty common to feel pressured in today’s market. As Bull explains, “FOMO is a valid feeling to be having right now. The sense of urgency and uncertainty that people are feeling is real. The stakes are high.”

The key, agents say, is acting on that FOMO responsibly by keeping your long-term financial goals in mind before you do.

“Clients are forgetting their big-picture goals in the hyped-up moment of multiple-offer situations,” says Emily Waldmann, a Realtor with DEN Property Group in Austin, Texas. “With so many properties going into multiple offers and significantly over the list price, people get hung up on wanting to win on a popular property, and they lose sight of their larger goals with the home purchase.”

Are you feeling a little housing FOMO yourself? Here are some other tips for not letting it get the best of you:

Have a backup plan.

“You need to have a plan — ideally a long-term plan and some backup plans. This holds true in any real estate market, but especially now when things are rapidly changing.

What happens if you sell your home now and prices continue to escalate? How disappointed would you be? What about if you wait, and prices come down? How will that impact your goals? If you buy a house today and pay a premium, will you be able to ride out a down market or will you outgrow the space too soon?

These are the types of questions I ask my clients. There is no right or wrong answer. The goal is to come up with a strategy so that people can make decisions with confidence.” — Bull

Keep your goals in mind at all times.

“You need to be really clear on what your goals are, so that you can evaluate each opportunity individually. Write them down, so that you can refer back to them when you’re in the pressure of the moment.

When working with clients, we always review this upfront and get really clear on what they're looking for out of a purchase — whether it's an investment that they plan to build wealth through or a location that they want to raise their family for the next 15 years.” — Waldmann

Don’t try to time the housing market.

“A lot of people are trying to time the market, acting hastily or holding off on making a decision and waiting until conditions improve. In the meantime, they are unhappy with their current situation. People should work on their timeline and buy and sell property when it’s optimal timing for them and their unique situation.” — Bull

Find good partners.

“This is the most competitive real estate market in history. Make sure you are working with the best real estate agent, lenders and attorneys to advocate for you. This is not amateur hour. You need people with expertise to help you navigate the current circumstances.” — Bull

More from Money:

Rushing to Buy a Home Can Lead to Serious Regret. Here's How to Not Hate Your House

Rate-Conscious Homeowners Are Repeatedly Refinancing Their Mortgages. Is Another Refi Right for You?

Lightning-Fast Home Sales Are Leaving Sellers Stranded

Half of Homes Are Selling for Over Asking Price. Here's How to Decide What to Bid