Housing shortage in Israel – personal story

This is a personal story, not expert financial advice. Please do your own due diligence.
 
A few weeks before I got married in ’99, my wife and I came to Ariel to look for a rental. It was pre-war and hi-tech was ramping up, the college was gaining momentum and the massive building projects next to the college were being completed. The real estate market was heating up. We drove around looking for rental ads or signs on balconies, nada. We were relegated to the agents.
 
We went to three agents and saw some potential places but mostly ‘old’ places or different sizes, nothing that grabbed us. I’ll give credit to the secretary at Eli Arbiv, after we came back to the office, disappointed about not finding something ‘nice’, she gave us advice that is once again relevant today, “what you see today is not going to be on the market tomorrow. You do not have a few days to think about your options. See something decent and suitable, take it. Start negotiating with the owner and maybe you can get some touch-ups.”
 
We went to the next agent, saw three apartments and chose one with a nice (sorry, awesome) view, a 2 metre kitchen counter, no balcony, and overlooking a strip mall with restaurants open really late, a parking lot which was active 24/7 and lived there for about seven years.
 
The market in Ariel, in fact all over central Israel right now, is one of a major housing shortage. During the mini-recession in 2002-2006, many builders went out of business or reduced building starts. The financial papers talked about the supply of apartments running out in a few years and here we are; the amount of new apartments does not match the demand. And rising prices have speculators in the market as well buying ‘investments’. Some areas in Jerusalem, Ashdod, for instance, are suffering from heavy buying by foreigners who in trying to do a mitzvah of owning land in Israel, are a) raising the prices for us Israelis, and b) not living in the apartments year round and not renting out either consequently driving the shortage to epidemic proportions.
 
The time is not one to be picky and certainly not one of looking at some decent homes and sitting on it for a couple of weeks or even a day or two. You never know when a ‘better’ home will get put on the market, but that dilemma can drive anyone crazy, and that’s why it’s good to have faith in God to send you the most suitable options to choose from.
This is advice for many places in Israel now, not only Ariel. The new market valuations in shekels has also wreaked havoc with the market, so try to get immediate advice from others who might have an idea of value comparison.
 
Of course, no one can be assured of anything. One might find a nice place, but have lousy neighbours and vice-versa (preferred, IMO). One might feel like they’re really compromising, but end up with a nice landlord who agrees to make improvements and does not pester.
 
If you know you want to live in a certain place, whether Ariel or not, it’s not a buyers market right now.
 
The preceeding is also more geared towards renting, though relevant towards buying real estate as well. I could not tell you if the continued boom will last, and certainly if, or when Israel’s economy will hit the downturn and prices will drop.
Josh
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5 Responses to “Housing shortage in Israel – personal story”


  1. 1 arielaliyah July 2, 2008 at 8:06 am

    I agree with everything you’ve written, Josh, except for the last line.

    We don’t need Israel’s economy to hit a “downturn” so that prices will fall, and we certainly shouldn’t look forward to it. That’s for two reasons:

    1. A primary reason for the rise in real estate seems to be the fact that the market has become unstable. Nobody knows how much their property is worth, ever since everyone started pricing in shekels instead of the wavering and weary dollar. Prices have surged throughout the country, but not everyone can afford them. When push comes to shove AI think that prices will naturally fall – at least somewhat.

    2. I wish it was easier to make aliyah, but it isn’t. Until recently a popular excuse for not making aliyah was that Israel’s economy was doing so poorly – how could one possibly survive in Israel? Now the excuse is that America’s economy is doing so poorly – how could one possibly survive in Israel? Those who choose to make it and succeed in their aliyah will.

    The market’s tough, but at least in certain places (let’s take Ariel for example) you can get your money’s worth. Like you said Josh – speak with the locals, find out what’s considered a good deal, and run with it.

  2. 2 telavivre October 17, 2008 at 4:48 pm

    wow, wow, wow… looks like there is a little bit of frustration in this article. I guess somewhere along the line someone in the US or UK imagined Israel to be Uganda or a region in the midddle of Arkensas 😐 The housing “shortage” is not something that reflects the changes in “the economy” or the “downturn” as much as the ability of people to buy Real Estate. If you are looking for some validation of Smith’s or for that matter Fisher’s economic theories you are thinking way too much. Also, you are missing the fundamental changes in the Israeli landscape.

    1) The Israeli banking system has finally discovered “mortgages”. This is not a joke. If you look at the orthodox sector until about 10 years ago nobody has ever entered a bank with an intention of borrowing money for a home. This has changed in the sector to almost 90% bank financing (I presume that in Ariel this is a very high percentage as well – go look it up).

    2) From speaking to French, Britons, and Americans almost nobody has been buying housing in Holon, Ashkelon, or Cesaria to be a “good Zionist”. I guess neither of you have seen CNN footage of riots in Paris or London suburbs. Most of the French jews who buy in Israel are doing it because they are scared. Some in the US are not just scared but know that hard time are coming. Looks like financially they may be “here” already. When the word spread that the Israeli financial system is strong, building standards are high, social stucture is sound – I guess this is something the writers here forget the big picture when they are looking for 4 walls and a parking spot :8-)

    3) Take a look at the big picture, you came to a wonderful place with a good economy and people who are changing the way Jews have lived for over 2,000 years. So you need a job that pays a bit more to afford a nicer diggs!

    Have fun and start looking at things a little brighter. Otherwise you will turn into one of these old people who complain about Israel at every turn of the way. Oh, I guess we heard that story — that’s what Moses heard fron 10 out of 12, or did you forget the story of Jerico and Jashua ??? Just open up the “good book” as these christians in Arkansas say :8-)))) !

  3. 3 arielaliyah October 22, 2008 at 12:56 pm

    Hi telaviver,

    My personal inclination is to avoid responding to comments – particularly when they make little to no sense. However, in this particular situation I’m going to make an exception, if only for the simple reason that internet talkbacks are remembered not for their content but for their attitude or “approach” (something that you’ve tried to take advantage of).

    After that quick intro I’ll try not to waste any more time. In short – you’re right – always lookon the bright dside of life. BUT – this is an ALIYAH BLOG. We want people to – that’s right – make ALIYAH. We also want people to SUCCEED in ALIYAH (see blog title and subtitle). Therefore, we are not into misleading people about the reality of housing and employment in Israel. We want people to know what’s going on so that they can plan their aliyah effectivly.

    When I speak with olim and potential olim I stress my simple motto – Realistic Expectations. At times it may be a bit of a turn-off. After all, people love to lulled into dreamland. BUT – so far I’ve found that Realistic Expectations is the only thing that works.

    If you have any other useful pieces of advice please share them.

    Thanks!
    Avi

  4. 4 josh October 24, 2008 at 1:17 am

    The frustration is from two angles one of which is that the cost of housing is rising. If you are an owner, so what if the value of your home is rising, so is your next potential purchase. And for everyone else renting, there is less disposable income around to spend. I am not concerned about my home rising in value but rather that new and young families will simply be priced out of the market.

    The housing shortage in Israel is alive and well. With the American ‘credit crisis’ making waves around the world, Israeli banks are limiting their risks and raising the bottom limit of mortgages. Mortages interest rates were also raised this week in general.

    I don’t understand why you think mortgages here are new. I know many people that took out loans in the 90s and some others have finished paying off the mortage taken in the 80s. If anything, the Haredi are more and more relagated to mortage for the reason that families are much larger these days and the parents cannot afford to put down a sizable chunk of cash as in the past.

    BTW, it’s possible to get 100% mortgage but it’s called fraud and very illegal.

  5. 5 Yaakov October 10, 2010 at 10:44 pm

    Having recently made aliyah with my wife, I will add my two cents worth to this subject. Over the past month plus, we have searched for a comfortable and affordable small apartment in Israel to rent for us. I found it is very difficult. Real estate agents tell us that the supply of listed apartments is very low and the demand is very high, especially in popular cities like Tel Aviv and Jerusalem. This situation translates into limited and expensive vacancies. Yes, the vacancies are not so great and agents continue to scramble to make deals. We remain optomistic and believe Hashem is watching over us and will guide us to the right apartment, preferrably soon, so our aliyah experience becomes less taxing on our finances and emotions and more satisfying and meaningful. Yes, enjoyable.


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