And How Much Does Land Really Cost in Israel?
I received a phone call a couple of weeks ago from woman with an obvious New York accent. She claimed to be Modern Orthodox and she and her family were looking into making Aliya. The first thing she commented to me was, “I heard that to live in Bet Shemesh like we do in New York will run about $200,000 per year.” I asked her how many children she had, and she told me three. Then I asked her where they live in New York? She told me that they live in Cedarhurst, in the Five Towns of Long Island. I told her that from my understanding, you need at least $500,000 per year to live nicely in the Five Towns, which she agreed. My question to her then was, “So what do you want from Israel?”
Notice: This is Not an Unrealistic Pro Aliya Propaganda Piece
If you expect to hear all that is wonderful and nice about Israel, you’re reading from the wrong source. Truthfully, there are a lot of advantages about living in Israel today, and there are disadvantages. While some of us would like to have the power to change things for the better vis a vis lower taxes, smaller bureaucracy, etc, the purpose of this article is to help show you options to navigate your way to a successful Aliya. What is a successful Aliya? It means that you arrive in Israel and don’t turn around 2 years, 5 years, or whatever later, and return to the diaspora after giving up on living here.
With the above in mind, we can write another article with concrete recommendations of how to make housing and land more affordable to average Israelis. However, as they say in the casinos, this article is about how to play with the cards we’ve been dealt.
Price of the Land in Center of Israel versus the More Peripheral Areas
If you are above middle class economically and can afford a private home in a city such as Ra’anana for $1,500,000, $2,000,000, $3,000,000, etc, our advice won’t benefit you too much. If on the other hand, you are coming to Israel after selling your assets in the diaspora and you want to live in Netanya, Ra’anana, Jerusalem, Bet Shemesh, Modiin, etc, be prepared for less house in ratio to your potential annual income affordability. Many people live in apartments who otherwise lived in cottages before making Aliya. This is a financial reality. Even for those fortunate enough to be able to afford to purchase a private home in the center of the country, the average yard/property size is usually much smaller than what is expected in most United States and Canadian suburbs.
As you travel out of the center area be it south or north and sometimes in Judea/Samaria, you can begin to find more house for your money. Don’t expect to find a huge house with a huge yard for next to nothing like you can in some Midwestern US states. You will however, be able to have a nice house with a yard in some communities for the same price as an apartment in a center city.
The importance of Trains and Highways when buying land in Israel
Although it’s come late, Israel is advancing quickly in building more fast-rail trains and train stations. This has changed once thought of far-away cities such as Afula in the north. Not too long ago, Afula was a town with just 40,000 residents. In a few years from now the population will hit 120,000 residents. What ignited this super growth? The train. Now, a high tech worker in Afula can get to his job in Haifa without driving in about a half an hour. This beats the Long Island Railroad. Seven years ago you could purchase a privately owned building lot for 800,000 shekels in Afula. Another 800,000 shekels and you could build a beautiful single family home. At the time the dollar was stronger against the shekel than today. The whole deal would have cost you about $450,000 at the time. Today, if you make Aliya and want to repeat this exact same exercise, it will cost you about $600,000. Not a bad investment, especially if you leveraged with a 75% mortgage.
A Diamond in the Rough: The cheapest land in Israel may offer a better Living Standard
About twenty minutes from Afula and around twelve minutes from Tiberias, and eight minutes from Lake Kinneret, there is a valley with a village called Yavniel (or Yavne’el). The prices of building lots have risen in Yavniel even more in proportion to the rest of Israel over the last 15 years. Still, many people haven’t noticed yet. This is like the stock price of a company that the Wall Street analysts haven’t started following yet, but is really a good buy. One strategy in investing in equities is to find companies that are doing well and have good profit growth potential, yet are not on the big brokerage watch lists, yet. By the time the big guys start coverage, this type of company has had its best percentage gains.
A village like Yavniel isn’t a big city but it isn’t the middle of Montana either. There are schools and health clinics in the village. There is grocery shopping and auto mechanics. There are swimming pools, and youth centers with after school activities. It is close to major shopping in Tiberias and not too far from Afula and the train. A private building lot for a single family home including purchase tax, legal registration, and commission is about 500,000 shekels (about $160,000). Sure, 15 years ago it was about $40,000. This isn’t cheap, but for private land for housing it is among the cheapest land in Israel. Calculate a nice house on that building lot and in total you can be all done for $400,000. Of course you can build bigger on more land if your budget allows for it.
The idea here is to make a mental switch. Some English speakers have already moved into Yavniel and similar communities. The quality of life including fresh country air, close proximity to Lake Kinneret, the hot springs of Hamat Gader, the holy graves in Tiberias, the close drive to the beautiful Golan Heights, etc, combined with Sabbath and Yom Tovim that feel like days of rest, of holy days, affords a very different lifestyle than the rat race that many of us have come from in North America.
You may make less money. You may drive a less fancy car because the taxes are higher on cars in Israel. You will pay less for health care. Much less, for good health care. You will pay next to nothing for Jewish elementary and high school tuition and later college. Anyone coming from America will admit that the best form of birth control for religious families is the ridiculously high prices of tuition.
With all the turmoil and open anti-Semitism in North America, the question isn’t whether it will get worse. The question is how much worse and how quickly? The shekel has strengthened steadily over the last 15 years. Real estate prices in Israel have risen steadily over every 10 year period since the founding of the State of Israel in 1948. It’s not just what Israel has to offer you, it’s what you can contribute to Israel, not just by writing a check at the office, but by getting on a plane with your loved ones and settling in the land. Time to come home. We’re waiting for you.