The Israeli housing market is now at a turning point. Local inflation, which now stands at 4%, has affected many indices in the local economy. A very significant index that has been affected as a result is the housing price index.
Comparing the prices of transactions made in February 2022 – March 2022 compared to the prices of transactions made in January 2022 – February 2022, it was found that apartment prices rose by 1.9%, thus completing an increase of 16.3% compared to the same period last year (February 2021 – March 2021).
In the segmentation of changes in apartment prices by district in February 2022 – March 2022 compared with January 2022 – February 2022, price increases were recorded in all districts: North 2.9%, Central 2.4%, Haifa 1.8%, Tel Aviv 1.5%, Jerusalem 1.3% and South 1.2%.
In the segmentation of changes in housing prices by district compared with the corresponding period last year, February 2022 – March 2022, compared with February 2021 – March 2021, price increases were recorded in all districts: Central (18.5%), Jerusalem (16.7%), Tel Aviv (16.0%), Haifa (14.9%), North (13.8%) and South (12.3%).
In the price index of new dwellings, it was found that their prices increased by 1.0% in February 2022 – March 2022 compared to January 2022 – February 2022, thus completing an increase of 20.7% compared to the corresponding period last year (February 2021 – March 2021). The percentage of transactions carried out with government support and participated in the calculation is 12.5%, compared with 12.8% in the previous period (January 2022 – February 2022).
In the last week of May, the Bank of Israel raised the interest rate by 0.4% from 0.35% to 0.7% 5. This is expected to slow down the rate of increase in apartment prices, whereas the rate of increase in rental prices is expected to continue to accelerate.
In the US on the other hand, it seems that the real estate market is behaving similarly. “In Atlanta and the immediate area there is still a chance to purchase the perfect first apartment,” says Gene Morgan, a real estate agent for Berkshire Hathaway’s HomeServices service.
“On the other hand,” Morgan adds, “the best-preserved residential real estate is expected to continue to remain listed for sale for a longer period.”
Such reports, especially when they come from the best sellers in the real estate market, are good news for those who are tired of fighting for housing, especially in a market where there is so much competition.
According to information provided by the U.S. Census Bureau, data on home sales in the country has slowed, and mortgage payments have risen, leading most buyers to deviate from the route of buying their apartment.
This week it was reported how the demand for mortgages in the US is at a low. The reason for the decline in demand is first and foremost the rise in the central bank’s interest rate. The previous month had stopped slightly in previous weeks.
The continued rise in mortgage interest rates may eventually lead to a fall in the prices of residential apartments. In recent years, apartment prices have climbed all over the world, and here in Israel the situation is no different. But nothing climbs forever, and in the end if prices are high, and when the mortgage is too expensive the demand will hurt as well. It seems that this is what is happening now in the US, but will we see it here soon as well?
Either way, all eyes are now looking at the local real estate market to see if these symptoms will persist, with a change of one or more of them likely to point in the direction the U.S. housing market will go.
New listings and price reductions
During the last two decades there has not been a period in which apartments were sold at such a rapid rate as between December 2021 and April 2022. On the other hand, for sellers who found themselves off the market during this period, the new information provided by the authority suggests that the situation may improve for them.
Interest rates in the US market put the initial brakes on. This, together with high inflation figures and the economic slowdown, along with the slowdown in stock markets has led to a decline in US real estate prices. The real estate market in Denver for example, is greatly affected by this,
Supply supply to the US market has also increased, which has increased the market for many buyers. The number of apartments registered for sale has increased once this week, this is the fifth week in a row, according to data from the Realtor.com website.
It is also the seventh week in a row that the median increase in apartment sales has slowed, despite the fact that it is still above its historical average.
“Current data suggests that the market will calm down in the future, although this is the distant future,” said Real Hale chief economist Daniel Hale. “With more options, apartment buyers will be able to bargain with the seller and take longer to make the decisions for themselves.”
Similar data was also presented on the Redfin website, which showed how in the four weeks that passed between May 8 and 29, the sellers lowered the price of the property at the fastest rate since October 2019.
“These price reductions represent the adjustment of sellers’ aspirations to reality,” says Redfin chief economist Daryl Fairweather. “The sellers have put in their heads that if the price of the property is $ 500,000, they can sell it for at least $ 550,000.” Notes, adding that “this fact is no longer true, the market has crumbled and now you have to price the apartments in a way that is more in line with reality.”
The volume of sales of existing apartments is expected to continue to slow down, according to indicators such as the activity of the buyers themselves – active signatures and the submission of mortgage applications.
The volume of contracts for signing contracts for existing dwellings has fallen beyond expectations in April, according to the U.S. National Realtors’ Association for Sale of Dwellings. .
This is not the only sales index that fell beyond expectations in April, when the government index “New home sales”, Ash allows to measure the amount of new apartments sold, fell in the month by 16.6%.
As mentioned, the demand for mortgages also fell this month. A mortgage allows you to borrow a very large amount of money – several hundred thousand dollars – in exchange for a commitment to repay it within a few decades.
According to surveys conducted in recent weeks in the United States, close to 17% said that in their view, this is not an ideal time to buy an apartment. This is the lowest percentage who have ever responded.
Let’s start with the last index that the Americans look at to measure the rate of housing prices in the US – “Housing Market Index” of the American Contractors Association. The simplest explanation for what the index indicates is the contractor’s confidence in current market conditions. This year, when the month of May reached its lowest level since June 2020.