French Immigrant Housing Trends

coastal housing

coastal housing

The tally of Jews immigrating to Israel from France has grown to nearly 7000 with over one thousand arriving last month. It is believed that terror attacks against the Kosher Market last January and threats against those protecting Jewish sites as well as mass desecrations of Jewish graves have brought many French to the decision of purchasing a home in Israel.

Buying trends for the French immigrants show that they are still buying in what was one of the strongest earlier French communities, Netanyah. Growth in the area of Ashdod, although quieted last summer due to thousands of rocket attacks near or adjacent to the city has not resulted in a real estate losses. In spite of the recent war Ashdod is growing strongly and steadily as prices increase there over 25% in the last two years.

According to an Advocate for a local law firm specializing in French language customers and reported on in Globes the French are buying homes to rent until they make the move, even buying “flips” older properties to renovate and resell. Many are also buying businesses here, “Clients that came to me were very interested in food, mainly fast food – hamburgers, pizzas, as well as cafes and patisseries. They’re bringing the knowhow here from Paris in the field of baking and food and that gives them a relative advantage over Israeli businesses.”

Communities along the seacoast are experiencing the highest level of growth from French purchasers, from Ashdod to Hadera. Jerusalem attracts a more religious French population who are attracted to the neighborhoods of Bakaa and Mekor Haim where there are French synagogues.

French Bakery in Tel Aviv

French Bakery in Tel Aviv

80 story Tower in Tel Aviv to be city’s tallest served by new underground metro

Several months ago the transaction of the large parcel IDF (Israeli Defense Forces) owned land was sold for development for housing to help relieve the housing shortage in the Israel’s largest and fastest growing city, Tel Aviv.

Plans have been released for the 2 new 80 story towers which will be in the central location on the corner of Shaul Hamelech and Weisman streets. The complex will include the office towers and three other apartment towers which will provide 770 new housing units. The new complex is affectionately known as the “toblerone tower” for its triangular shape and resemblance to the famous Swiss candy bar. The project itself is called the “Rockefeller of the Unstoppable (or city that doesn’t sleep) City”. The units will be small, two and three room apartments all measuring 65 and 83 meters.

The eight acre parcel will also includes park areas and bike paths as well as underground parking. The new project will also be serviced by a planned underground tube which is known as the “green line”. The metro will run on the Ibn Gvirol route.

Tel Aviv, along with Ramat Gan and Bat Yam continues rapid growth becoming as I have coined it, the Singapore of the Middle East in the “start-up nation”.

Ashton Kutcher property hunting in Israel

Café on Tel Aviv's Rothschild Blvd.

Café on Tel Aviv’s Rothschild Blvd.

Ashton Kutcher, who is a serious Tora student, according to co-star from “No Strings Attached” Natalie Portman, was not in Israel for religious study recently, but is looking into investing in property on Tel Aviv’s Rothschild Blvd.

The actor is business partner with Guy Oseary, a producer in the US music industry who have invested together in a number of social media companies. The partners looked into the project at 22 Rothschild Blvd which is slated to rent for $35-41 a sq. meter. They are seeking a location for an office locally from which to run a center in Israel for high tech start-ups focusing on social media.

Kutcher has expanded his personal fortune with early investments in social media start-ups, including Twitter. He also heavily invested in Yoav Shoham’s Katango, Israeli professor at Stanford University, which was sold to Google for tens of millions of dollars about two years ago.

Young Couples/Adults are Waiting out markets

A decline in apartments sold was felt all over the country in the first quarter with a 15% drop in sold apartments from the last quarter of 2012 to the first quarter of 2013 according to the Central Bureau of Statistics. Statistics reflect Hadera to Beer Sheva, where there was a 27% drop. This statistic differs from my April 23rd post which also included housing starts bringing that figure to 20% from the prior quarter.

Most affected by the current real estate market are young couples and young adults where sellers still hold on to high rental prices as well asking prices for sales. The young demographic is choosing to remain at home, living with parents. High real estate prices and the austerity measure of 40% down payment required by the bank of Israel are the main cause.

In Israel unemployment levels are healthy at about 4.5% but the basic salaries for those entering the job market are hindering affordability to young people. Young adults and parents here  are choosing to wait out the trend downward hoping for lower prices as well as a change in government policy making housing more accessible and affordable. Traditionally parents in Israel will help their children to purchase, but wary parents are also looking for a decline in prices and required downpayments.

A similar situation can be found in the United States but has been created for different reasons, housing and rental prices are still affordable in most major US cities but the lack of even minimum wage jobs is causing a staggering 85% of college grads with bachelor’s degrees to return home to live with parents according to Time Magazine study.  Of these grads 54%  are unable to find work and instead move on to higher degree education hoping to be in a better position while waiting for economic recovery.

Change in tax codes – will it really help or hurt homebuyers?

The new finance minister, Yair Lapid has announced a change in the tax rate on the purchase of apartments to alleviate the difficulty “for young couples”.  The new tax rates announced that will go into effect on May 5th are that a home costing up 1.47 million NIS will not be subject to purchase tax. From May 5  a purchase of a home of any price for a first time buyer only will be a flat 3.5% for any priced home costing more than 1.24 million.
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The plan is designed to help only first time home buyers and to finance it by creating a betterment tax for those buying a larger or more expensive home even if it is their primary residence.

The current maximum purchase tax rate is 7%, on purchases of homes for investment costing NIS 3.26 million or more. On May 6, this rate will be lowered to 5%, and the threshold will be lowered to NIS 1.05 million. In 2011-2012 a tax freedom for the sale of an investment property (any home other than your principal dwelling) was temporarily offered to entice those holding investment properties to sell in order to create inventory which would help lower prices.

This new code primarily attempts to help the new home buyer. The government’s plan to finance this new tax plan will place a new burden and revenues on those who are moving up the housing ladder on a larger or luxury home, in essence the 2nd home purchase. Sale of investment properties or second homes will no longer be exempted from sales tax.

It is this writer’s opinion that the government has succeeded in its stated goal in late 2010 to forcibly burst any development of a housing bubble by increasing the minimum downpayment to 40% from a former more open market where the bank could opt for as low as 10% down to qualified customers. The effect of all of these measures has been to overall depress the housing market and impede first time home buyers who would be far more assisted with a low downpayment than a release from a purchase tax which might have formerly amounted to only a few thousand US$.

Why isn’t my apartment selling? Pearls of wisdom from a former sales manager.

remodeled kitchen in contemporary trends

remodeled kitchen in contemporary trends

“Why isn’t my apartment selling?” This is a question in any market, but especially one experiencing a slow-down that sellers ask.  To quote a former sales manager of mine there are three primary reasons; “terms, PRICE, and condition” his sage words also included “anything will sell for the right price”.

Since sometime in early 2011 when government enforced Bank of Israel austerity measures went into place and the market overall began to trend downward.  In the eyes of the government as well as astute individuals in economics this was a necessary correction.  Other factors have also entered into this equation; two of the world’s major currencies are experiencing losses, the Euro and the US Dollar, as are their respective economies.

Israel is not an economic island.

Both the sales and rental markets here have experienced downward slides.

Unlike the buying and selling personality of the States, the Israeli seller doesn’t have a vast reservoir of information like the Multiple Listing Service where over 90% of properties are listed exclusively with agents with all its data of solds, listed, etc. Statistically only 1/3 of properties on the market here are in exclusive listing agreements.The mentality is “my neighbor is asking this, my property is better than his, so I should get this.” Meanwhile ‘that’ price may have no basis in real market value but just owners overestimating their values. Appraisers often fall victim to the statistics of “what are people in the area asking” and have little familiarity with the real grit looking at numerous properties with buyers and seeing what’s selling for what price and who is in the market buying it, even they can often give a false view of value and not a real market value.

Another deceptive reality in the marketplace is with the prevalence of such do-it-yourself for free websites such as Yad2 or Win-win, whether its homes or vehicles, individuals can instantly place free ads that are “trial balloons” just to see if the fish will bite at an inflated price and are not serious sellers. This is common enough that it can give a false impression of true market value.

A universal truth regardless of country is that unless you have an educated seller who is critically aware of his marketplace, sellers overvalue their own homes.

Real market value can usually be hit on fairly closely by an experienced realtor in the area. Another judge is an individual in the buying public who is seriously looking to purchase also seems to have an innate feel after a bit of looking as to what’s overpriced and what’s priced right and they are not influenced by emotional attachment to the property ‘for sale’.

Another factor mentioned earlier is the strength of the present reserve World currency, the US Dollar.  Even though rentals are now pretty much quoted in shekels, when it comes to sales there is still a background thought of the $ value even if the buyer has his money in British pounds or Euros.  If you listed when the dollar was at 4.05 to the shekel and now its 3.68 your price should be adjusting to the loss of the dollar rate.  To make it simple, we’ll use 1 million $ as a reference; if you listed at 4,05000 NIS (when it was equal to 1 million US) if the shekel is now 3,680,000 you need to lower to that.  If it wasnt selleing after a couple months of trying, you may need to lower to and equivalent 0f 10-20% less.

Since 2011 property values have dropped to where sellers here are having to ask and get about 15% less than they could have gotten in 2010. Although terms and condition do make an impact, referring back to my former manager, “it’s always price” and “any offer within 5-10% of asking price is a good offer, not an insult”.

The good news is for those who are truly priced right at the gate, they will still be able to sell to the educated buyers out there who know what the right price is.




” New Spirit” partners with Builders for secular housing in Jerusalem

Young Jerusalem residents founded a group called “New Spirit” with a goal of reclaiming the identity of Jerusalem as a multi-identity city to help tip the balance of the city’s cultural personality.  Their goal is to attract young families to build their lives in Jerusalem who are secular and to resist what is known as the “haredization” of the city’s neighborhoods.

In partnership with builders, “new Spirit” has claimed 30 apartments in the New Talpiot development on Beit Lehem Road to be sold at a 15% discount.  Buyers need to meet a number of criteria: that at least one of the couple is under age 41; that the partners work at least a combined 125% job; and at least one partner is a college graduate. Guidelines can be altered and will be judged on an individual basis.

Prices will compete very closely with new construction the relatively new but religiously mixed community of Har Homa. A three-bedroom apartment (105 square meters) starts at NIS 1.475 million ($390,000); and a 121-square meter four-bedroom apartment starts at NIS 1.685 million ($440,000). Prices for existing homes in Har Homa are slightly lower.

The contractors are Balilus Group, M. Aviv, and the Rosenzweig and Baruch families, state the idea is based from a social outlook to a sector they perceive as desirable purchasers.  THey voice concern over the high and prohibitive cost of buying in Jerusalem for two-income young families.

The action group with the builders  hopes that their actions however small will influence perceptions to provoke a shift in the Jerusalem population and the appeal of the city. THis is their third housing group purchase.

Elisheva Mazia, director-general of New Spirit, stated,  “Each time, it’s exciting to see how we open the door for young couples to buy an apartment in Jerusalem at a discount and make a life in the city.”

Prepare for a new wave of French buyers

The recent crisis in the European econmoy that has sent Euro holders reeling has brought a rise in interest in local property purchase.  In France a recent Israeli apartment expo brought a record attendance of more than 5000. Reasons for the record attendance not only reflect fears of a failing euro and lost values there, but rising anit-semitism after the recent shootings in a French day school.

Many fairgoers are young couples looking to make aliyah and seeking upscale areas where they can attain a similar standad to France, such as Hadera and other coastal cities less expensive than Tel Aviv.  Older attendees looked at Netanya and Jerusalem to be closer to their religious communities and friends already living here.

The intifada years of 2000-2004 were not only marked by recession, unemployment and business losses, but a significant drop in the real estate market.  In the years following, 2005-2010 as the country entered into greater stability due to increased intelligence and security measures, the property market entered the boom that doubled values almost overnight for those who did buy in the earlier half  of the decade.

During the intifada many agents exagerrated the role of the French buyer who enjoyed strong property value in France and saw local real estate as a bargain.  There came a significant influx of French buyers into the local property market. French fears of future anti-semitism caused buyers to invest in a pied-a-terre here that would be an investment of assurance.

Many of the French property owners did not make aliyah, however, but became landlords or simply came to visit leaving their apartments here empty. In the ensuing years a percentage saw that France seemd economically more opportune along with rise in their Israel property values so some even sold their holdings here for profit.

The results of this recent fair attendance and poling there showed that there is a shift in attitude with buyers looking more seriously at making Israel their home.

Greece’ last week’s run on banks. Where do they move money?

In the past week the country of Greece now in a Euro crises has seen over 890 million Euro withdrawn from its banks by depositors in the last week.  While the recent rash of withdrawals sent a tremor through other countries expeiriencing similar failures economically, Greek depositors have actually been systematically moving their assets out of their banks for nearly two years.

Where are Greeks moving the money to?  First most popular is into German, British or related Banks seen as stable such as HSBC. Another form of popular investment is in stable property markets nearby, such as Berlin, in tangible commodities such as precious metals.

Although Israel may be experiencing a market correction of late that has seen property value dip and the market slow, investors who see Israel as a safe haven may push prices back up as British and French place their Euro holdings in property in Israel. This makes a difficult reality for local people hoping to move up the property ladder reasonably, but will continue to the market moving here.

Opportunity for US$ Property Buyers in Israel

The tremors of the Euro and in the US stock market have helped shore up the dollar here against the shekel.  At a current rep rate of 3.82 NIS those who were in the property market last year with assets in US currency who forestalled buying now find themselves in the best of positions.  Many sellers who bought new apartments from builders in the last year or two that put their selling on hold not wanting to move temporarily to rent while awaiting their new apartment now find their present apartments worth 10-15% less value due to a slight glut in the existing second-hand market.

Haaretz published an extensive article on the current conflict in the Israeli property market; that sellers are reluctant to lower their prices but the reality for those who must sell is “accept a lower price gratefully”.

This is seen by many property agents as a market correction, with government assistance after the stellar rise in values over 2005-2010 that brought prices too high.

This agent has worked significantly in the Maale Adumim market where many young families took the periphery location as a compromise to get more apartment for their money in hopes of mobility in the next few years. This agent’s experience has proved that many units that have been priced at a current popular asking value are sitting unsold months later.  I recently noted a very improved newer apartment in an excellent building in that locale with an attractive asking price compared to the competition.  I called the seller who already had an offer in a few weeks. They priced themselves about 11% lower than competing properties and sold in weeks.

The number of those under the pressure in the periphery who bought new units on paper are now facing the crunch; ask a realistic and modified price based on current values or sit until forced to move.

If I had a pulpit in the United States I would push the message “Buy now while your dollars are still high!”  With current US fiscal policy the strength of US dollar is most likely a very temporary situation.  For those who dream of a pied-a-terre in ISrael, now is the time to take the plunge!