 Hi there. Welcome back to my YouTube channel. This is Daniel Rosalier. I wanted to do a video talking about an article that came out in the Times of Israel, which for those who don't know is a very, very big online newspaper. It came out on October 6th. So earlier this month, relative to when I'm recording this video, the article was by a journalist called Ricky Bendavid. And it's entitled, Israeli housing prices have nearly doubled in a decade with no signs of slowing. Now, I don't typically record videos about articles that appeared on news websites. And the reason I'm doing this is because I truly think that this was a very, very significant article. And it's also an article that I suspect and I know is going to be glossed over in the news cycle. In fact, it's already happened. Now, yes, that's only natural. There is such thing as a news cycle and things get displaced. But there is a much bigger issue in my opinion in Israel. And that's permanently that these huge socioeconomic problems get totally pushed out of the way because there's always some security situation that forms the central part of political parties, election manifestos. I've been living in Israel for six years. During the course of that time, I've lived through multiple elections, including the famous three elections stalemate we had. I've tried to follow what the various political parties have been putting out in terms of material intended to reach voters. And I've seen very, very sparse attention ever being paid to not just the housing crisis, but indeed to any socioeconomic Israel issue in Israel. That includes also the cost of living, which has been repeatedly found to be among the very highest in the world. According to one index, Israel was rated the eighth most expensive country in the world and the second most expensive country on a per square meter property basis. Now, this is kind of what this article by Ricky Bendavid discusses talking about basically how insane the property bubble has become. Now, that actually brings me to a point that there's really not much scope to talk about the Israeli property bubble. Because if this is a property market that shows no signs of correcting even during the pandemic, is it really fair to call that a bubble or is this just the typical state of the housing market here in Israel? Now, a lot of the coverage talking about real estate in Israel has been talking about how positive that attribute of the market is. The market always goes up. Property in Israel is a great investment. And I just have to make the point, even though it's 100% obvious, one person's great investment is another person's struggle to get on the property ladder. And that issue is just not being addressed, but it's dressed very, very well by this article. One other observation I would say living in Israel and consuming, I try to watch one hour of Hebrew TV or YouTube per night just to try to get the language going. I'm seeing, thankfully, more attention being paid in the internal discourse to this issue. And that is so, so overdue because the numbers here are mind boggling. Now, this whole housing crisis issue doesn't just talk to an issue of here's a problem in Israel and here is the extent of the problem. And here are some solutions. I think this also talks to a dynamic. I've been seeing for quite some time, especially recently for whatever reason, this massive disconnect between diaspora, jury and jury in Israel. And there seems to be this mentality. I don't know if it's always been a mentality or it's just emerged that you can't criticize anything about Israel without being anti-Israel. And that's ludicrous. It's crazy to suggest that this housing crisis, this is a huge issue. You know, if a diaspora, some Jewish person living in London or in New York were to ask me, what do I think about living in Israel? By the way, I was quoted in this article and I would probably repeat the quote that I gave this journalist, which is how can I possibly envision a future in a country that only offers indefinite renting and in which the rental market is kind of a disaster. There's really no such thing as long-term rents in Israel. Rents relative to property are not actually that expensive, but it's kind of an unregulated jungle. And people would say Israel is an amazing country and it's doing amazing things and hasn't its response to COVID been amazing. And I would say all those things are true. Now, some people, of course, are very anti-Israel politically. But with the pro-Israel crowd, I can connect about all those issues, but I can't really connect because as somebody living here, this is the issue. The cost of living, the salaries relative to the cost of living, which do not make sense by and large. And the property market, which is, yes, a global dynamic, but in Israel, it's an insane dynamic and it creates a feeling of total and utter hopelessness for young people living in Israel because the amount of money required for a down payment. This is, if you ask me, the single most concerning slash shocking fact in this article, it's $262,000. That means that to qualify for a mortgage, we're talking about the down payment, not the cost of the property, to qualify for a mortgage because Israel's central bank limits the down payment at 25%. That's the entry level and even that's higher than a lot of countries. Ireland, you can get 10% first time homeowner mortgages. But that $262,000 down payment, which is to state the obvious, more than a quarter of a million United States dollars. That's what you need to get on the housing market in Israel. That does not make sense in a country where the average salary is in the 40,000 to 50,000 range. How are young people supposed to come up with a quarter of a million bucks in savings? That's ludicrous. There are other just really, really good observations in this article by Ricky Ben-David. I just want to scroll through it for a few minutes and just sort of talk about a few of them. One interesting one here was that year on just this year so far, YTD year to date, it's been more than a 12% increase in the price of real estate. Now that is crazy. We're talking about 2021, the year of the pandemic. This article was written in October 6, which means they're still effectively October, November, December, an entire quarter left in the year for that 12% to become 15% or 16%. So to say that the market is overheating or overheated is a gigantic understatement. That's what the Times of Israel shows as its subtitle. Personally, if I was working at this newspaper, I would have gone for the shocking mortgage figure. But that one is pretty shocking too. Whoever was copy-editing this piece had a lot of options to choose from in terms of statistics. So that's shocking. There's a few more here that are just kind of mind-boggling. The average price, now one thing about Israel for those not based on Israel, to no important context for reading this article is to understand that in Israel, the vast majority of people are living in apartments, not houses. So not only are we talking about staggering sums of money, $250,000 United States dollars. We're talking about those staggering sums of money to live in an apartment, not a detached home. It's just ludicrous. The average price for a four room, this was in 2011, right? That was 1.45 million shekels, which is today $450,000 in US dollars. And that's actually gone up. That's an old figure. By 2013, housing prices had increased by at least... I'm not trying to rob this article from the journal. I'm just trying to regurgitate or repeat some of these just to really get the extent of the housing crisis out to anybody interested. And that includes I think a lot of diaspora Jews who again, as I mentioned, I hate to use this word, but I think live in a kind of permanent delusion about Israel and just buy into this idea that everything in Israel is perfect and everything Israel does is perfect. Now a lot of people will hate me for saying that, but I do believe a lot of people buy into that. This is not perfect, this is not a perfect situation. By June 2021, so this is the current figure, the average cost of a four room apartment in Israel was roughly 2.2 million shekels. $682,608 USD at the time this article was published. So that's almost $700,000. Again, we're talking about an apartment, not a detached house. So that's where the market stands. You can see why the situation is so problematic because on the one hand, you have these absolutely crazy property values. On the other hand, you have this high minimum down payment requirement levied by the Central Bank of Israel. And I have rarely been called a mathematical genius, but if you multiply a big number by a relatively high multiplier, you're going to get another big, big number out of that mathematics. And that's kind of what has happened in Israel. There's more details here. One of those is that it talks about the government's scheme to incentivize home ownership, which is a lottery program. It was the replacement for Mechir la Meshta'ken, which was Israel's older program. And it talks about how, I don't want to use the word miserly, but how limited that is in terms of a scheme and it's qualified by all sorts of qualifications, like the fact that the houses in it cannot be in what are called luxury or desirable areas. Just a couple more things before I wrap up on this video here. Now, they included some good commentary from economics researchers who do point out that it is a global issue. There's absolutely no doubt that young people around the world are having difficulty getting on the property ladder. But what I, in the quotation I sent in for this piece, what the economists are saying is essentially that, well, in Israel, it's just like taken, it's like injected with steroids. It's so crazy. So people, now here is again, here is a bit of the article I find absolutely mind boggling. So this is from Professor Dani Ben-Shachar. So people looking to buy an apartment nowadays must come up with roughly 840,000 shackles, $261,140 in private equity. So that's that number there. And it's the source of that is his, this research by this economist for the Q2 of 2021. And that's already risen from the start of the year where that figure was 230,000. So you can see the extent that the idea of owning property in Israel, to say it's a moving target is again an understatement. Research has also shown that the wages in Israel have not really risen commensurate with the cost of living, which is also extraordinarily high. So the financial situation that exists in Israel today, I don't like to use the word impossible because it's so negative and obviously there's lack of hope. Everything can always be changed. So my hope would be I'm thinking about writing a book on the general economic picture in Israel, really. And talking about some of these suggestions, right now we have simultaneously going on a few dynamics that are just impossible. We have property being insanely expensive. We have the cost of living being very high. And the third dynamic we have is that salaries outside of the 10% of the economy working for high tech companies remain relative to the cost of living insufficient or too low. And this is just pushing in a year in which that equity required for home ownership has risen by more than 25,000 USD in the space of one year. I mean, how can you work with those economics? It's not possible to work with them. Also worth pointing out, there's a huge concentration of wealth in Israel and a huge degree of income inequality that this article points to. So this was a shocking, another one of the shocking numbers according to a 2014 report, 67.3% of assets in Israel were held by the top 10% of the top, in other words, I doesn't say of what I believe it's of by net worth. So we're talking just just pause and think about what was written there that two thirds of the property in Israel are owned by 10% of the population. Now what you've seen happen in Israel is just this crazy mass wealth transfer of land originally being relatively cheap or property being cheap and that no longer being the case and a lot of people holding a lot of it and using those properties as investment properties because it's a great market to invest in. It's a terrible market to come here without a fortune in your bank account and you attempt to organically save money through doing a job that pulls in an average Israeli salary, which is kind of my situation and to try to amass more than a quarter of a million dollars in savings. That just does not make sense. So there's some more statistics here about the Michir Le Mishdaken program I mentioned earlier and some guy asking if that was a joke, the income distribution and the restricted supply. Now this is where the article gets interesting because it's one thing to point out everything that is wrong with this country. It's another thing to posit solutions. Now let's just talk about something extraordinary. I'm just going to swap back to the article momentarily. Over 90% of the land in Israel is state owned and managed by the ILA, the Israel Land Authority. Now what is alleged or being described by these economists is that that's a crazy high percentage firstly of state ownership of land, 90%. And it's basically saying that there is restricted supply and it's insufficient to meet demands, but again this is where we venture into the territory perhaps of conspiracy theorists. It's saying that the banks and the property developers are doing very well. Now if you're interested, if your Hebrew is good enough there is a good show called Ta Ezraah Guetta. It means the Citizen Guetta, it's a former Shass MK and that's up on Khan's YouTube channel and that's kind of similar. He investigates these issues. He's done one about the major developing companies that get these crazy state tenders to build out massive. So there's people doing very, very well in Israel and there's people doing poorly. I don't want to paint myself as a victim, but I'm just a typical young person. There is hundreds and thousands of olim like me for whom this picture just does not make sense. And I, you know, it's just crazy. So this was, this guy says, is it a joke? The target price program replaced, replacing the Mikhail Lamech.ken by Alkin. It's 20% if you win it. If you qualify off the market price. Now again, we have to point out that 12.5% in the year to date. That is just, it's absurd and it's qualified by location and that's the best solution that the Israeli government has been offered today. And there's more discussion from the economists. Basically the ideas are being number one to break this ridiculous state monopoly on the supply of land in Israel. The second idea being tabled is to punitively tax foreign Jews. No, I hate to say foreign Jews, but predominantly those investing in Israel's real estate bubble are foreign Jews because it's created this bizarre situation in which people who actually move to Israel olim khadashim are unable to get on the property ladder and Jews who have not decided to live to Israel are getting wealthy on the back of Israel's market. So it's kind of talking about state intervention on the one hand pulling back intervention in the supply of property or land for development and on the other hand increasing state intervention in enforcing punitive taxation measures against these high net worth individuals who are driving the bubble and on the third hand building more on the fourth hand offering something better than 20% in places that probably not so many people want to live and in places where most people couldn't really get a job and these are all problematic dynamics. So right now based on this piece it would be toxic positivity to say that there are many happy takeaways from this article. There are many good questions raised. There are some very illuminating things pointed out here about how wealth is distributed in Israel and how in what I think is fascinating in the space of such a short time Israel has gone from such a poor country such a socialist country to such an extreme capitalist country with high income inequality 67% of the property owned by the top decile and nowadays for somebody coming to Israel having to find some way to muster up more than a quarter of a million dollars simply to put a down payment on an apartment that is absolutely ludicrous and I will end with this thing. People talk about threats to Israel all the time especially politicians talk about Gaza they talk about Hezbollah they talk about the Iranian nuclear program and these are threats these are physical threats to the survival of Israel I saw someone on Twitter make this point and I want to back it this is also a massive threat to Zionism because Israel is trying to bring in some vast amount of new immigrants 500,000 and its playbook needs changing in my opinion it's just saying come to Israel to never be able to own property who would want to do that so Zionism and ideology can only take Israel so far and these dynamics are just I can't I would honestly say it's funny because I'm following this video up with one about mental health and honestly these dynamics are kind of depressing because in the Israeli economy of a 45 hour work week it kind of feels a bit thankless to be working very hard to just rent forever in a rental market that is unregulated and also has its own set of problems that weren't discussed in this piece so I'm sorry to be negative I do believe the toxic positivity is a massive massive problem and thing in the pro-Israel community that gigantic gigantic flaws with the economics of the state of Israel are just swept under the carpet and people I saw someone on Facebook saying you know this article is fake news if you're going to the level of conspiracy theory just to tune out the pointing out of uncomfortable realities then there is a problem thank you for watching that video and hopefully more videos coming soon about Israel and other things of interest to those subscribing to this channel