Important Factors for Buyers to Consider in Summer '23

Important Factors for Buyers to Consider in Summer '23

If you're considering purchasing property, whether now or in the future, it's crucial to be well-informed about the current market conditions.

In this blog post, we will discuss three key aspects that foreign buyers should keep in mind when making their investment decisions in the summer of 2023.

USD vs. NIS Exchange Rate

The exchange rate between the US dollar (USD) and the Israeli shekel (NIS) is a crucial factor to consider for American buyers.

While future rates are unpredictable, it's worth noting that the current exchange rate offers approximately 15% more purchasing power for US buyers compared to 17-18 months ago.

Despite market prices rising, the favorable exchange rate allows buyers to obtain more shekels for their dollars.

Although we cannot forecast future exchange rates, it's essential to recognize the current advantageous situation.

Pricing Trends

There has been speculation about a market downturn, but it's important not to be swayed by scaremongering.

In some areas of Jerusalem outside of prime Anglo neighborhoods, it's possible that market prices have decreased, this also is relevant to areas outside of Jerusalem.

However, in the specific market where my clients typically invest, this has not been something I am seeing.

Demand remains high, transactions are taking place, and the market is active. Rather than waiting for a potential decrease in pricing, buyers should consider taking advantage of the current market conditions.

If for some unlikely reason, the Jerusalem prices drop by 5 to 10%, but the dollar rate moves 10 or 15 percent to below 3.4 waiting for a price decrease will not have been worthwhile.

Borrowing Costs

One of the advantages for foreign investors is the ability to secure long-term fixed-rate mortgages for up to 30 years at interest rates below 5%.

According to American clients, borrowing the same amount in the US would likely come with rates around 6-7%.

Despite rising rates worldwide, Israel maintains its competitiveness in terms of achievable rates for purchasers.

The availability of competitive borrowing rates contributes to the stability of pricing, as foreign investors might well prefer borrowing cheaper money in Israel than in other countries

Conclusion

As a foreign buyer considering a property purchase, it is crucial to be aware of these three factors: the USD vs. NIS exchange rate, pricing trends, and borrowing costs.

While the future remains uncertain, the current market conditions offer advantageous opportunities for American buyers with increased purchasing power due to the favorable exchange rate.

The absence of significant price drops and the competitive borrowing rates in Israel further support the idea that now may be an opportune time to enter the market. If inflation and interest rates level off then 6 to 12 months later prices may start rising quickly another reason now is potentially a great time to buy.

By staying informed and considering these important factors, foreign buyers can make well-informed decisions and may well position themselves to try and find the right opportunity in the current 2023 summer market.

(This article is not data-based but rather based on Ben Levene's personal market experience and opinions. No decisions should be made without thorough due diligence and professional financial advice.)

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