FOMO When It Comes to Buying Houses at The Moment?

Saw a couple of houses today.

Looking at buying our first home and have been looking for about 4-6 months in the South Eastern suburbs of Melbourne. (Covid has impacted our house searching somewhat- I am back to casual but still earning good money)

In the last 3 or 4 weeks in particular, houses that we have seen at say 10am inspection times have had offers on them the same night!!!

What the hell is going on? Do people have a fear of missing out at the moment….

Yes, we really want to buy a house but some of these properties have legit been unbelievably bad and in need of heaps of work.

I am not trying to be picky but an example I will give you.

"Another buyer walked in the same time looking at a property. In there for the same amount of time as myself, didn't check anything just eyed it down, we both happened to walk out the same time and he said to the agent he was really keen and wanted to put an offer in asap".

I was perplexed. Each to their own I get but wtf is happening!!!

I am very easily losing motivation at the moment.

Comments

  • Money is cheap, every one can get a loan and mortgage now cheaper than rent.
    Same here in Qld, everyone going nuts, pretty much just offer on the spot.

    Gov caused this, through stupidity, and over the top grants.

    • Well that's good to know its not just the civilisation of Melbourne going off their tits.

      • you think Melbourne is rough? take a trip down to a Sydney open house

        • -19 votes

          You think Sydney is rough? Fly up to Shanghai / Beijing. Ordinary 3 bedroom high rise apartment fetch as high as $7M AUD.

          • @pig: we don't care about Beijing son this is Australia,

            • -2 votes

              @striker5950: Most people with money in China wants to move overseas

              All they need to do is sell that one pretty ordinary apartment and they can buy good quality family friendly house in Sydney and spare change to retire happily ever after. Thanks to Trump & his radical supporters, US is now viewed as a crumbling country full of riots, covid, guns, racist, and stupid angry people.

              You might not care but a lot of investors factor in this information in their buying decision.

          • @pig: Better off crying to Winnie The Pooh about that lol

          • @pig: Not sure why this is negged… When considering a city like Sydney, it is fair to compare it to the world market of top cities i.e. Shanghai, Tokyo, London, NYC etc. I am not a super fan of Sydney but the reality is that Sydney is world famous and its price should be benchmarked against the rest of the world, (and the rest of capital cities in Australia benchmarked against Sydney…)

            • @oztite: I commented before that the Asians think that Australia is still cheap. That's why they come by the thousands… Unless, government stopped "foreign take over", property will keep going ballistic…

              • @Bargain-er: Absolutely agree! But I don't think any political party will want to come up with a policy that stifles export / economic growth and apparently not many people care about this. If asians house market crash then I could see Australian house price to follow

              • @Bargain-er: Did you notice, most of Aussie properties owned by Yankees and British?
                We definitely should stop them!!!

            • @oztite: Sydney belongs to Australia. It doesn't belong to the rest of the world and should be priced for it's citizens and not international speculators and hot money from other nations.

              • +1 vote

                @elixe:

                should be priced for it's citizens and not international speculators and hot money from other nations

                Australia is not a socialist/communist country. Price is dictated by the market with the foundation of supply and demand.

                When the border opens, half a million people will want to become Australian resident. Majority of them have asset from their home country.
                As oztite mentioned - Australian housing is relatively cheap.

                Spending $4M on 5 Bedroom house in good suburbs is cheap if they can sell their 3 bedroom apartment dinky apartment for $7M.

                • @pig: It is not 'cheap' to spend $4M on a house when it is 40-50 times annual earnings for an average worker.

                  Land value is determined in part by infrastructure which was once the 'common-wealth' of Australia, that is belonging to all Australians.

                  It is not good policy to permit colonisation of a country through foreign capital inflows.

                  At least do some research before promoting such idiocracy on democracy/communist issues - perhaps you may like to identify the political system in each of the nations below?

                  Here is a short list (not exhaustive) of some neighbouring nations that ban direct foreign ownership of land: Indonesia, Philippines, Thailand, Cambodia, Laos, China, Myanmar, Papua New Guinea, Brunei, Bangladesh, Mexico (within 50km of coast).

                  • @elixe: I think we are on a different page here.

                    I'm referring to the majority of cases where people migrate their family here to get a better life.
                    Once they become Australian Citizen - its no longer foreign ownership.
                    They sell their assets overseas and bring them here - this is good for Australia.

                    It is not 'cheap' to spend $4M on a house

                    Again .. this is relative. Its not cheap for average Australian, but its cheap for people who already owned 3 bedroom apartment

                    Just to further emphasis that I'm not referring to the ultra-rich buying houses remotely or international speculator.
                    I'm referring to ordinary people who wants to be Australian resident.

                    Here is a short list some neighbouring nations that ban direct foreign ownership of land

                    I can tell you that the ban is not effective and it was put with so many holes in place to enrich corrupt officials.

                    Land value is determined in part by infrastructure which was once the 'common-wealth' of Australia, that is belonging to all Australians.

                    … now this sounds like how real estate agent get away with under-quoting.

                    • @pig: If Australia attracts selfish migrants from high-population, low-trust societies we bring the consequences down on the heads of our own children and sell our birthright as did Esau GEN 29:34

                      Although Perhaps CJ Dennis said it best

                      Gyved and chained in his father's home,
                      He toiled 'neath a conqueror's rule;
                      Bowed to the earth in the land of his birth:
                      The Slave who was Son of a Fool.

                      Poor remnant he of a conquered race,
                      Long shorn of its power and pride,
                      No reverence shone in his sullen face
                      When they told how that race had died.
                      But the meed that he gave to his father's name
                      Was a down-drooped head and a flush of shame.

                      Oh, the Fool had reigned full many a year
                      In the Land of the Bounteous Gifts,
                      Dreaming and drifting, with never a fear,
                      As a doomed fool pleasantly drifts;
                      And he ate his fill of the gifts she gave —
                      The Fool who was sire of a hopeless Slave.

                      Year by year as his harvest grew
                      He gleaned with a lightsome heart;
                      His barns he filled, and he sowed and tilled,
                      Trading in port and mart.
                      Proud of his prowess in sport and trade
                      Was the Fool, who scoffed at an alien raid.

                      Little he recked of the gathering cloud
                      That boded a swift disgrace.
                      Was he not seed of a manly breed,
                      Proud son of a warlike race?
                      And he told of the deeds that his sires had done —
                      While he wielded a bat in the place of a gun.

                      Small were his fears in the rich, fat years,
                      Loud was his laugh of scorn
                      When they whispered low of a watching foe,
                      Greedy for gold and corn;
                      A foe grown jealous of trade and power,
                      Marking the treasure, and waiting the hour.

                      And, e'en when the smoke of the raiders' ships
                      Trailed out o'er the northern skies,
                      His laugh was loud: “'Tis a summer cloud,”
                      Said the Fool in his Paradise.
                      And, to guard his honour, he gave a gun
                      To the feeble hands of his younger son.

                      Oh, a startled Fool, and a Fool in haste
                      Awoke on a later day,
                      When they sped the word that a foe laid waste
                      His ports by the smiling bay;
                      And his voice was shrill as he bade his sons
                      Haste out to the sound of the booming guns.

                      But scarce had he raised his rallying cry,
                      Scarce had he called one note,
                      When he died, as ever a fool must die,
                      With his war-song still in his throat.
                      And an open ditch was the hasty grave
                      Of the Fool who fathered a hopeless Slave.

                      They point the moral, they tell the tale,
                      And the old world wags its head:
                      “If a Fool hath treasure, and Might prevail,
                      Then the Fool must die,” 'tis said.
                      And the end of it all is a broken gun
                      And the heritage gleaned by a hapless son.

                      Gvved and chained in his father's home,
                      He toiled 'neath a conqueror's rule;
                      While they flung in his face the taunt of his race:
                      A Slave and the Son of a Fool.

                      • @elixe: Yeah, i super agree with you. Unfortunately, only gov can stop this from happening. They're doing better with foreign tax and new establishment rules but don't think it's enough. It's a decade too late to fix the loop holes. Many immigrants buying properties for overseas families and kept them empty while waiting for them to come. I have a friend who's a developer, and selling the townhouses tp overseas (no local marketing) and he said better profit and less headache.

                      • +1 vote

                        @elixe:

                        attracts selfish migrants from high-population, low-trust societies we bring the consequences down on the heads of our own children and sell our birthright

                        OK this is getting weird when you start throwing bibble stuff around. Also, do you call people migrating from Sydney to country Tasmania selfish if they want better life?

    • People just don't realise that:

      When COVID passes good luck finding money to travel.
      With all this debt who is paying it back, the normal people with higher taxes.
      If interest rates go up even a little bit before the stock market throws a tantrum a lot of people are going down.

      • inflation will happen soon, then the interest rates up, then people going to ACA blaming every other person for their stupid loans, there will then be a royal comission into poor bank lending blah blah blah, and so on…

        people are going spastic with paying for things, i hope it catches many out.

        • Yeah. People with short memories.

          Responsible lending was the result of royal commission.

          I am not surprised if a lot of people are just doctoring their income to get loans.

          Debt is all good until one day the repayment doesn't come through and you start digging and the assets you thought existed was pledged multiple times as security to different lenders.

        • that's why its too big to fail at this point

          • @echelon6: Just wait until it is too big to rescue.

            Then you got a problem. Is the government going to borrow trillions to pay everyone's mortgage. You know where government revenue comes from.

            Odd thing is people are against bail out unless it is for them.

          • @echelon6: I absolutely hate to agree with you but there is no way interest rates will go up any-time soon. Politicians will do just about anything to keep the recovery rate appearing positive although the level of debt is absolute madness. Perhaps in about three or four years but even then….

        • The world isn't fair, it won't play out like that. People buying houses with cheap credit will have made 50k in equity before interest rates increase again.

    • mortgage now cheaper than rent

      For the same property? huh?

      • um

        500k property rents at ~$500 per week
        500k mortgage @1.98% fixed int = ~$240 / week

        not sure how you struggle with this one

        • This is the thought process that people were going through that unravelled those in Perth when the market started to dive. Banks were willing to lend to households that banked on the infinite gains of property, burning many in the process.

          Houses lost ~20-25% of their value and when their interest only period was up then they either had to double their payments orrrr sell their asset at a loss. Many people have lost money on houses, except this doesn't make it to the press because the Murdoch empire of Realestate.com/Domain only publish instances when people make "100's of thousands over reserve".

          It's like gambling sites, they don't publish the losses, just the instances of profit.

        • How about stamp duty, upkeep etc of the property? You are conveniently leaving that out of your “math”.

        • not sure how you are calculating your figures here. i can assure you im paying a lot more than 240 a week….

          unless you are simply paying interest and not paying off capital. but even then. i mean thats a pretty bad move.

          • @Zetrox2k: Not counting capital I am just talking pure loss.

            even adding $100 for maintenance per week, $100 for rates

            stamp duty is free if first home, but it may take 3-4 years to negate it

            you still come under or near enough.

            When servicing a mortgage is cheaper than renting due to current interest rates then to me thats when things aren't realistic.

            people who can't get a deposit are getting poorer, and those who can get over that tipping point or already established just getting richer.

        • Most properties that rent for 500/week cost 750k+

        • 500K mortgage @1.99% ( Principal + interest ) = $426 per week
          Plus other costs of ownership. And you wont get interest only at this low rate

          Just correcting the math, not recommending to rent than buying. At these low rates it does make sense for many people ( not all ) to buy.

          • @maximus1980: I don’t include principle just the pure cost of having the mortgage.

            I’m just using man example of 100k deposit for 500k house (mortgage belt of gc)

            Current rent is 500 a week

            at 2 percent 400k is about 160 a week in interest, add on 100 for rate and 100 for maintenance and 60 for insurances and maybe 60 in lost income from the deposit you are pretty much even

            My main point is renters who can never save the deposit are stuck 4 ever right now. It used to be the first 5 years or so you are worse off having a mortgage but now you benefit it from day 1 excl stamp duty.
            , and other shit fees to purchase.

            Interest rates will rise 2022, bond yields already showing this. Biggest cliff will be 2025 when 4 year fixed rates end.

            Interest are so low it’s going to cause high inflation , and the abs downplays actual inflation so they can keep rates low. Real inflation would be 6 percent or so if you include housing .

            Australia has nothing but mines, banks and an inflated real estate market, as a country we don’t do that much.

      • That is how they get the poor suckers in.

        Than jack up interest rates. House prices don't go up. People can't sell as it will be a psychological hit to their pride. Then you push up the rates and squeeze. Basically mortgage holders end up like GameStop hedge funds, caught on wrong end of the squeeze.

        3 years of low rates, 27 years of squeeze.

    • x2 for this one.saw this happening from last couple of months.till late septmeber & october things were still at the stage when you had atlast 4-5 properties to choose from.Now its so bad that there will just be 1 house up for sale in every couple of weeks and when you see the no. of ppl turn up for inspection you know right away that you' won't get it. prices of even mediocore properties are way out of the park and people are actually competing to pay that much or even higher.Demand is skyrocktetting while the supplly has run dry.

      • Property is Bitcoin for the masses. Now if you can "Blockchain property shares". Three of the hottest names in investing.

    • Regional Queensland gone mad at moment we got house in covid in july 2020 240,000 now same house selling for 330,000 market hot as hell. but what i love it over last few year all my mate have become first home buyer now pay less on lone then rent and rental market less then 1%

      • but are the properties being rented or just sitting there with 'for lease' signs, thats what im interested in

  • +2 votes

    When you say SE suburbs - which one is it? I do see some increased buyer eagerness (feedback from friends in the area) but could be suburb dependant.

    Also, it isn't unheard that RE/sellers could also stage people to create urgencies…

    • SE suburbs - which one is it?

      Black Rock

    • Mulgrave/Keys, Noble area.

      Not as Rich as MsPaint and can afford Black Rock.

      I needed an inheritance to buy a home there.

      • Mulgrave is getting that way too.

        I think we are reaching a tipping point. Where FOMO is converting to AMO (Actual Missing Out) for a big cohort of the population. ie. If prices continue to go up any more, they become simply unaffordable for a big chunk of the population. So its now or never.

        With regards to Mulgrave I wouldn't buy there. There is no train station. Either go south to Sprigvale, or NE to FTG/Boronia. There is a big swathe of suburbs Mulgrave/Rowville/Scoresby that arent (and probably never will be) serviced by train. FTG/Boronia are still good value for money atm.

        • I don't necessarily think its now or never. I will just have to adjust my expectation cost price and buy something better than for the price im looking at.

          Have to have some hope.

          • @iNeed2Pee: we are very much in the same boat - all the sudden mulgrave was so popular - FTG/boronia is also catching up e.g. 4 bedrooms house is around 900K crazy…

            Btw, there are some agents using “urgency” tactics to squeeze money out of fomo buyers so stay conscious.
            The government also plays “dumb” as long as they get money from stamp duty it is all good 😌

            • @kungfupanda: wow, im surprised you think 900k is expensive, its all relative, you cant even buy two bedroom apartment at that price let alone a house in Sydney.

        • "So its now or never." - the biggest lies of all sellers of all kinds of anything.

          Every time I hear that, I walk out of the deal

      • People said "Now or never" in the 90's when the ave price was $180,000

        • And since then, we're in the top of least affordable property markets in the world.
          Guess how much they can push it up?

  • I think in melbourne covid restrictions stopped people doing anything in the last 12 months. Now there is some sort of light at the end of the tunnel real estates going bonkers.

    • There's been a lot of pent up demand for RE for years; with Chinese buyers mostly locked out (at least temporarily) a lot of first home buyers that have been saving up are looking to get their foot in the door, especially with the positivity around vaccines this year.

      • Chinese locked out. Now we are just bidding the process up between ourselves. Maybe the Chinese will save us when we unlock the borders.

        • Not really, have a friend whose working with a major home builder & she said last month they had a person from Wuhan buy a house & land package from them.

          • @jdf: Wow. Just because I have been hit by lightning then everyone else must have too. Or just unlucky not to.

            Statistics, not some mate. Not everyone from Omaha Nebraska is a sage at investing.

            • +4 votes

              @netjock: What are you on about? You said Chinese are locked out, I gave you a real world example of them buying property while still overseas. Plenty more examples according to her, Wuhan just stuck in her head & ours given COVID originated in Wuhan or are you debating that too?

  • wanted to put an offer in asap

    Putting in an offer and if being accepted are two different things.

    • I understand that, but it hasn't just been one person. Sometimes I have seen two parties going toe to toe at a private sale with the agent.

      It even felt staged at one time.

      • Yeah, maybe they do get people from Airtasker for short impro work and then all go to the next Open in separate cars.
        If they have scripts or there is lighting/makeup or wardrobe then something is going on.

    • Are you sure

    • +27 votes

      I think most houses are underquoted, not undervalued. I find it hard to believe that agents aren't aware of how hot the market is and consistently quote 150-200k less (off by more than 20%) than what houses sell for. It's literally their job to predict sale prices within realistic limits.

      • Agree 100%. Buyers are getting played with the underquoting and they are putting in offers to see how realistic their quoted prices are.

      • 100% agree!!!

      • Possibly some kind of tactic to get buyers to get attached to the house if they think they will be able to afford it, then when they realise they need to up their offers they think, "it's ok, just a bit more then it's ours" and try to keep them going as far as they can.

        If the buyers knew how much it the REA was actually looking for in the beginning it might put them off.

        Something like how ticketek operates in the US, they only show the fees at the end because the customers are engaged by then and reluctant to cancel the whole purchase.

        Just a wild guess :)

        • It definitely is a tactic. Saw this happening a lot in early 2018 when prices were booming. The agents mostly underquoted. In a suburb where a mate was looking prices hover around $1.1 mln - $1.4mln but agents would mostly say "around 1mln" which could be a well 20% under sellers expectations.

    • I beg to differ. These houses have not been undervalued, quite the contrary. They have been on the higher side. Especially after looking at the comparable properties.

      • The other buyers had a different opinion and acted on it.

        • And thats your opinion. Thanks for commenting.

          • @iNeed2Pee: GL with the 🏠 hunting and remember not to wait too long to enter the market. Other buyers won't.

            • @whooah1979: It's not that we haven't waited too long, it's just that not the right property has come up for us.

              We might be picky somewhat, but when we have saved the amount of savings we have, we don't want to be one of those people buying a crapshack just to get in if that makes sense.

              We are more than happy to pay our top dollar if the right house comes up. Probably expecting more stock than what has come out tbh.

              • +5 votes

                @iNeed2Pee: Picky is good, but make sure you are picky about stuff you cannot change (ie location, infrastructure around the place)

                • @pig: This is correct. Be picky in term of location and things you can't change. Not on main road, near hiway, etc. Initially we want a move in quality house in good location but to be freaking honest, the last 2 weeks price had gapped up 100-200k since 2020. Bizzare and i blame it to the stupid comment saying super ultra low interest for 3 years and media started to spur housing boom. May be it's just me doesn't like some particular ppl who like to make stupid comment in public. Anyway, we finally sacrifice the move in quality part but bought in an amazing location and great floor plan. Bidding was fierce and renovation will set us back 50-70k but this would be our home for years to come. No one knows what's gonna happen with property market. Atm, cash is cheap everyone wants a home while immigrants and investors are still out. I know i am too getting a FOMO… kinda ouch looking at houses sold some months ago for 100k less but… oh well.

                  • @Bargain-er: Yep, agree with both of you.

                    Was interesting about the main road. The house we saw yesterday was on a main road, opposite a school, oval and a bottle shop, and somehow the agent calls me an hour later saying it will be sold today.

                    Crazy bastards out there.

  • +10 votes

    The northern suburbs of Melbourne are no different. Houses quoted at 850k went past a million. One went for 1.2m. Cheap credit plus wild FOMO is about right.

    • And low stock levels.

      • Honestly, I find that hard to believe. All of 2020, sales were depressed. There should be pent up stock coming to market now.

        • Low stock because most potential sellers know they can get 10-15% more by waiting another 12 months.

    • My friend tells me Sunshine is going nuts. Add 30% to quoted range and you have a first bid

      • The auction stalls, agent goes inside for a discussion and comes back with a vendor bid. The crowd goes mild!

  • Property investors wanting their 9th property.

    • Hodl appreciating assets beats keeping money in the bank.

    • Why can't there be limits like toilet paper? Isn't that an obvious solution?

      • No it’s not. We live in a free market, imposing buying limits on anything is dumb. People deserve to be able to spend their hard earned money on whatever they want.

        • +7 votes

          Their hard-earned money. Year right…

        • The government likes to praise the "free market" and all but won't let the free market regulate itself.

          It's propped up by incentives like negative gearing to stop the impending bubble bursting.

          • @apoptosis: You know who also likes to praise the free market? Property investors. They liken buying houses to building a successful company, and call anyone who wants to remove negative gearing a "socialist", SMH.

        • +12 votes

          Stop with the "free market" sh!t. It ain't free market. Remove the incentives, then you will get closer to free market.

          • @No ONE: I'm actually surprised I've had so many downvotes on that comment. I'm pretty sure there are heaps of landlords lurking on Ozbargain from past threads I've seen here, so to actually be downvoted for that comment (which I actually made in jest — you should see what I normally say about property investing, I think it's unethical and social impacts of property investing will just get worse over time as fewer Australians are able to buy their own home) is quite refreshing.

            It's a shame that most of the time comments supporting property investing on Ozbargain are upvoted more than downvoted, so thanks to everyone who downvoted me, now go and downvote all the landlords who actually do invest in (or rather, hoard) property.

            • @Ghost47: It's just the statement "free markets" that got you negged, mate. There's no "free" markets, as it would require several factors that are currently not present or have been distorted by RBA (lowest rates in history), irresponsible lending practices, mortgage deferrals, government, $200bn deficit this year, agents, misinformation, etc.

              • +2 votes

                @galileo77: Spot on. 'Free market' is just an illusion. Laws are made to benefit certain groups of people who can influence lawmakers. This vicious circle goes on and on as long as the commoner believes the 'free market' illusion shown upon them.

        • A free market wouldn't have distortionary forces like negative gearing, or builder/buyer incentives.

    • Current boom is driven by owner-occupiers, not by investors.

    • Your assertion does not seem to have resemblance to the reality - from an ATO report -

      Here’s how many properties investors hold
      1 investment property – 71% (1.57million)
      2 investment property – 19% (418,000)
      3 investment property – 6% (129,784)
      4 investment property – 2% (47,469)
      5 investment property – 1% (19,861)
      6 or more investment property – less than 1% (20,756)

      • Your comment still says there are people with 6 or more properties out there. Doesn’t matter if the proportion is smaller, they still exist.