Foolish trying to keep up with Joneses
FOMO — a.k.a. “Fear of Missing Out” — is a term usually reserved for Saturday nights when a person knows she should stay in and save her money, but she goes out and parts with it anyway, because the thought of abstaining from a great party fills her with more dread than the reality of her steadily climbing credit card bill.
But FOMO isn’t something we usually associate with life’s larger, vastly more serious decisions, and yet — according to a recent survey published by TD Canada Trust — this is exactly where its pull may be strongest.
According to the bank’s survey, FOMO is not a term relegated to the realm of party-going; it’s also everpresent in the world of big city Canadian real estate, where 19 per cent of Vancouver and Toronto homeowners listed Fear of Missing Out “as a top consideration before making their first home purchase.”
The survey says 20 per cent of respondents actually “rushed” the home-buying process to “avoid missing out on an opportunity,” as many feared that not purchasing immediately would result in an expensive bidding war — or that by waiting they’d end up spending more down the line if housing prices increased.
And — surprise, surprise — guess which demographic surveyed proved the most susceptible to homeowner FOMO? According to TD, “Ontario millennial homeowners (22 per cent) are more likely than Ontario Gen-X homeowners (12 per cent) and Ontario boomer homeowners (14 per cent) to have had FOMO before purchasing their first home.”
Why is this? Marc Kulak, associate vice-president of Real Estate Secured Lending at TD Canada Trust, chalks it up, in part, to a competitive market and possibly a lack of foresight and research.
“Potential buyers,” Kulak said, “should make it a goal to learn as much as possible about the mortgage rules and the commitment home ownership takes before (they get to the) open houses where that fear of missing out develops.”
But what if that fear develops long before prospective buyers fall in love with a home at an open house? What if it actually develops, as so much does, online?
It is quite common, after all, for regular people — not vain or typically show-boaty ones — to post their success and happiness to social media, be that success and happiness a new job, a vacation, or in this case a new home.
And if you’re youngish and ready to settle down, the sight, via Facebook and Instagram, of your smiling peers on the lawns of their brand new homes may give the impression that your performance in money matters and in life at large is lagging and insufficient.
The result, you could say, is a digital keeping up with the Joneses.
But the truth is that things are rarely as they seem, says financial planner Shannon Lee Simmons. “So much money moves behind the scenes from parents that nobody really talks about,” Simmons said.
“So a lot of the time people are buying houses they can’t afford. And their friends then say, ‘Oh my God I need to buy a home!’ But nobody talks about the fact that many of these people receive money from their families.”
Or that they may be taking on an enormous, crippling debt.
“I see the other side,” Simmons said, “I fully understand that I can’t afford a home in Toronto. I’m priced out of this market, because I’m not going to get those gifts. But when you don’t know the reality behind the situation, you can feel like crap about your own finances.”
To combat this feeling and challenge the illusions produced by a life chronicled on social media, Simmons created a satirical Instagram account, the Real Selfies Project, in which she posts photos of nice things or experiences she has purchased (for example, a newly fur- nished living room, or a “fab dinner with the girls”), followed by photos of her receipts, detailing how much exactly those items cost.
And the reality — $499 at Ikea and $11 for a juice at a trendy café — does render a person’s lifestyle less glamorous.
“Nobody posts (on Facebook) ‘Just bought a new home, got six figures from my family!’ ” Simmons said. “We don’t post credit card bills with our photos of our vacations.” If we did, it’s hard to believe FOMO would be a persuasive factor in anyone’s major decisions.
Simmons’ advice: Owning a home is great, but there’s absolutely nothing wrong with renting.
“Don’t get caught up in the hype,” she said. “Focus on what makes sense for you and only you and stop comparing yourself to other people.”
Because if Fear of Missing Out is a bad reason to go out on a Saturday night when you’re late on your credit card bill, it’s an infinitely worse reason to buy a house. Emma Teitel is a national columnist.