Two Scandinavian Banks Boycott, threaten Israeli Banks

According to the popular Walla Hebrew news site the Swedish Nordea Bank, which is the largest bank in Scandinavia, and the Norwegian Danske Bank, have announced that they will boycott Bank Hapoalim for funding projects in what they call “occupied territory”.

The Nordea Bank also demanded that Bank Mizrahi Tefahot and Bank Leumi immediately make public their financing operations over the green line. The most familiar areas where building continues to be financed and flourish are the formerly outside the green line Jerusalem neighborhoods of Arnona, Pisgat Zeev, and Har Homa.

The action taken by the banks is the first bank to bank boycott. An Israeli authority highlighted that these are not decisions by the governments of Denmark and Sweden, but of private companies, making it impossible to for Israeli political leaders to protest.

Billboard for Bank Tefahot In Arnona, Jerusalem

Billboard for Bank Tefahot In Arnona, Jerusalem

Advertisements

Real Estate pruchases drop in Jerusalem and Tel Aviv, Haifa enjoys growth

Haifa is enjoying an increase in housing sales and prices while the other two major cities of Israel, Tel Aviv and Jerusalem are still seeing falling transactions and softening prices. The high tech industry overall in Israel is experiencing a 2.8% gain which could be reflective of the moving trend towards Haifa, one of the countries high-tech centers.

The second quarter in Haifa was marked by a 8% increase in housing prices while Jerusalem and Tel Aviv saw 2-1% drops according to the interdisciplinary center in Herzliyah.

The Finance Ministry “red lights” reports a nearly 15% drop in sales transactions in Jerusalem since a year ago in the traditionally active real estate months of July and August. Overall figures for real estate transactions countrywide can be deceptive as Haifa and Beersheva have regulated the overall statistics with positive numbers.

Treasury economists report the over all economic numbers for unemployment and consumer confidence are stable. The most significant drop in real estate purchasers are young couples and first time buyers who dropped by 30% since last year. It is this author’s contention that high prices, high down payments and sellers unwilling to accept reality and lower prices are the cause for the drop in ready and available buyers.

Q1 Statistics reflect downward Housing Demand

The Central Bureau of statistics reflects what realtors around the country know, demand is down for housing both in the rental and sales markets. Compared to Q1 last January, 2012, apartments sold or built reflect a drop of about 20%, since the prior quarter, demand is down 6%.  This drop affects mainly the markets of Tel Aviv and environs and the southern sector.

Demands were slightly better in Haifa and Jerusalem.  Many are asking what exactly is the cause of this drop in both the rental and sales markets. Chairman of the Real Estate Appraisors Association, Ohad Danus, claims the drop is a direct result of intentional government sanctions and austerity measures in the marketplace instituted in 2011. He stated,  “the developing trend is extremely troubling, because while the natural growth in Israel cannot be suppressed and should even be encouraged, the housing market can be suppressed – and this is what the government has been doing successfully in the past year.”

The recent trauma of rocket attacks last fall as well as the significant drop in foreign currencies such as the US $ and the Euro as well as the British pound are factors in this author’s opinion that cannot be overlooked.  Even if foreigners are not entering the marketplace with their currencies, many Israelis have their capitol invested in foreign currency savings accounts. Foreigners entering the Jerusalem market has long been a significant factor and with their currencies down and fears of war heightened fewer foreigners are entering that marketplace.
IMG_2071
The good news is for those who have the capital to invest the contrarian view is that 2013 is the year to purchase while prices decline.  Experts predict 2013 spring and summer months may see increase in activity but no change for the better in prices for sellers and landlords. There is still plenty of inventory in the major cities but only sellers with realistic goals and who need to sell will be willing to drop their prices to a real market value.

Mortgages granted up in March

Even with the Passover holiday falling in March (most banks give only partial service in that time) the number of mortgages granted was up this March as reported by business news magazine Globes. Good news considering that prices continue to drop with a general malaise in both the sales and rental markets in major metro areas.  This increase in mortgages reveals that in spite of the Bank of Israel restrictions put in place in early 2011, primarily the requirement of 40% down payment to obtain one, that there are those who are able and now willing to pass through the restrictions.

Concerns of rapidly rising prices in 2010 after five years of steady incremental climb, the head of the Bank of Israel announced banks would have to follow austerity measures in order to prevent a real estate boom to bust cycle, or bubble. At the time financial leaders here indicated that restrictions would be in place for two years.

 

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.

 

 

 

Statistics and Reality

bakaa balconySometimes statistics and reality just don’t seem to align.  Recent news indicates that housing prices are up 4.5% in 2012 and yet agents like myself will tell you the market has never been slower since 2000-2004.  As one who primarily deals with real estate in Jerusalem and Tel Aviv and their peripheries, most sellers have had to lower prices 10-15% lower from the highs in 2010 to secure a buyer.  It’s possible the statistic reflects this year only and not in relationship to the past three.

Still the price of housing here remains almost punishing in that Israel in its large cities is a market that affords only a small apartment for the price of 128 salaries.  Boiled down it means that the average couple earning an average salary each cannot afford basic housing in a major city or periphery with a 30 year mortgage.  And yet, somehow they buy.

Traditionally young couples are helped by their parents and moving up the housing ladder has allowed Israelis who already owned for a decade or more to see a significant increase in their property value enabling them to cash out for significant profit.  Before the shekel stabilized property was seen as the only way to have a savings account when runaway inflation regularly ate up the value of one’s money. Investors in those times now see a tremendous return, unlike those who invested in real estate in the USA.

 

Consumer Attraction

One of those undeniable truths of life is that if I suddenly am attracted by a fashion that I was formerly indifferent to, that somehow marketing, desire and scarcity have coincided to create a demand for a product.

Suddenly my own desires for apartment living have leaned toward the dream of either a garden unit or a penthouse with a large terrace space and view. I am joined in this dream with consumers around the country who are wanting the same, and now there is a shortage of penthouses in the coastal region as well as garden apartments and the moving trend is out of the city.

Penthouses in Tel Aviv have also reached demand exceding supply with even Donald Trump’s enterprises pushing for the project on Rothschild Blvd. to fulfill the complaint that “there is not a single nice penthouse in Tel Aviv”, quotes Ynet news.

There has been a trend in the last decade or slightly more to build buildings that include an outside space or balcony, to not have one now is considered a deficit to a property, like living on a high floor without an elevator.  Along with this trend there has been an increasing demand for pastoral spaces, the American Dream, a house with a yard.

The balconies were not that difficult to change the face of newer construction in Israel, but the demand for apartments with gardens has escalated along with the desire for a house with a yard.

This has caused a certain flight from the urban areas to more spacious areas that make a yard possible. Jerusalem in particular was noted in Ynet news.

 

Israel Home prices down in Q1

A U.S. magazine ranking housing markets globally has removed ISrael from the top ten in housing growth markets. In real terms the statistics reflect a minimum of a 5% drop in major cities where increases had been higher in 2010-2011. Israel has now dropeed to number 27 since the begining of 2012.

It is this author/realtor’s note that around the Jerusalem and Tel aviv markets where I have the most experience, prices have dropped in certain neighborhoods more than others.  Due to the recent strength of the US dollar, buyers with capital and the desire to own property in Israel are looking in traditionally Anglo-saxon locations, such as Raanana and the central neighborhoods of Jerusalem, such as Baka, German Colony and other residential areas close to city center. there prices have remained the same as Q2 2011.

Peripheral areas or the cities that are traditionally lower priced have finally made the adjustment that in order to sell and beat competition prices have dropped on popular advertising sites such as Win-Win and Yad2 8-10%.

 

” 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.”

What’s selling? What isn’t.

This week Israel’s business publication, Globes posted their recent sales column which confirmed the “word on the street” among real estate agents and business lawyers, that 2nd hand property inventory is high and what’s selling is the lower price market, but mainly in strong areas, not periphery.

It’s this author’s experience that while in 2010 sellers were getting close to asking. Now that asking prices are not changing, actual sales closings are about 10-15% lower in the mid-range market.

The real estate truth that the high-end and luxury market slows down first is evident here, with higher priced homes at and over the 2,500,000 NIS mark are not moving in either Jerusalem or Tel Aviv where inventory in these price ranges is the largest in the country. Closing prices cited in the Jerusalem area are mainly in the Rehavia area at a surprising 1,500,000-1,700,000. Rehavia traditionally a safe investment.

Tel Aviv agents also remarked at a slowdown with properties in the ‘golden corridor’ of Ayalon to seacoast, from Rothschild to the Yarkon River had lost about 10-15% of value compared to spring 2 years ago.