The Realities of the Jerusalem Real Estate Market
People had hoped that with the passage of time, the prices in the prime areas of Jerusalem would gradually decrease. However, from what I see on the ground, is that reality has yet to align with their wishes.
We are now going to present an alternate reality - situations that easily could have occurred, but from my professional experience are not commonly happening currently in the prime, in-demand areas of Jerusalem.
Imagine a world where the real estate market in the German Colony and Baka experiences a significant supply increase, making it easier for buyers to enter the market at favorable prices. In this alternate reality, 1,500 new apartments are set to be built over the next 2-3 years, resulting in the construction of 30-40 new buildings.
This surge in supply seems like a game changer that would slow down the market and benefits buyers.
Additionally, a new law has been enacted to streamline the process of obtaining permits for building elevators in older buildings. With this change, homeowners in areas like the older German Colony, Baka, and Old Katamon can now acquire elevator permits more easily.
An alternate reality
This makes apartments on the third or fourth floor of these buildings more attractive to Anglo buyers concerned about accessibility. The potential increase in demand for these units would further contribute to the market's supply.
Furthermore, the interest rates in this alternative reality have made a large number of homeowners desperate to sell, and have affected prices 10 to 15 percent below the asking price. Deals are frequently closing at a 10% plus discount, which was once considered a rarity.
As a result, downsizing or transitioning to rentals has become a popular choice for some homeowners affected by the rate increases. The market is buzzing with sale signs, indicating the impact of the rising interest rates.
However, before we delve deeper into the possibilities of this alternate reality, let us consider the reasons why these scenarios are unlikely to occur in our current world.
While the notion of a significant supply increase in the market is enticing, the reality of obtaining permits in Jerusalem can be time-consuming and costly.
The process does not lend itself to a swift influx of supply. Therefore, it is unlikely that such a substantial increase in the number of buildings and apartments would materialize.
Although the idea of readily available permits for elevators in older buildings is appealing, the actual process of obtaining these permits can be challenging. It is common for individuals to indicate future improvements, like the installation of an elevator, without concrete plans or the necessary permits.
While safety checks and feasibility assessments are essential for such projects, streamlining the process could benefit buyers and increase the supply of desirable properties in prime areas.
While rising interest rates can have a significant impact on the real estate market, it is important to note that the magnitude of the effect may not be as pronounced as anticipated.
Many individuals are without large mortgages or ties to prime rates. To replace a property or to move are very expensive processes
The effect of a drastic increase in supply at lower prices has not seemingly occurred, because, with strong demand in prime areas of Jerusalem, sellers are not compelled to sell their properties at significantly lower prices.
Conclusion: Supply is not increading drastically
In conclusion, while these imagined scenarios of increased supply, streamlined permits, and lower interest rates may be occurring outside Jerusalem’s prime areas, the reality of the real estate market in the prime areas of Jerusalem is not the case.
Supply does not increase drastically, sellers are not desperate to sell, and predicting the future remains an elusive task. Nevertheless, this presents a favorable time to consider purchasing property and positioning oneself to seize any opportunities.
Avoid the regret of not buying years ago and navigate the current market with an open mind and a readiness to act if favorable circumstances present themselves.
(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.)