This week I read the Bank of Israel report. Credit to construction developers jumped 40% in a single year, not because the market is strong, but because the banks keep pumping in money to prevent collapses. 83 thousand unsold apartments. Sales down 12%.
I read it and remembered Daniel and Ronit.
Both in their early thirties. She is a lawyer, he is an accountant. People who know how to read numbers. Half a million shekels saved together, shekel by shekel, over the years.
They wanted to buy a new apartment in Israel. That was the dream. The right thing to do. What one does.
But when they sat down to calculate, and with people like this the calculation was thorough, something didn't work.
With half a million shekels in equity, and with today's prices, the mortgage they would have to take would have them paying every month more than they currently pay in rent. Not a little more. Significantly more.
“Ilan,” Ronit told me, “the mortgage payments will be higher than the rent we pay today. And the cost of living isn't going to go down - daycare, vacations abroad two or three times a year, going out to a restaurant, a café with friends, or just keeping the lifestyle we've gotten used to. If we stretch ourselves to the limit on the mortgage, what's left?”
I didn't answer right away. Because I needed to think about it.
They weren't asking me to confirm that they were right. They were asking me to think with them honestly. And when someone asks for honesty - they deserve honesty.
I told them I understood the impulse. That I know how deeply the feeling sits in us that an apartment in Israel is “the real home,” that rent is “thrown away” money. But I asked them one question: what exactly are they buying with this mortgage? A property? Or a state of mind?
The conversation moved abroad.
They knew I work in Greece, as a lawyer who has accompanied deals there for years. They asked if there was something suitable for them. Not only as an investment, they said explicitly that they also want to feel the money, not just see it on bank statements.
We talked about a serviced-apartment hotel project in Athens. An apartment managed as part of a hotel, earning a yield from tourist rentals throughout the year. The price? With their equity, and a little more, they closed it with no mortgage. No monthly commitment. No stretching the rope to the limit. The yield from the property effectively covers their rent in Israel, net of management fees. And as part of the agreement with the management company, two weeks a year the apartment is open to them. Not a “theoretical option for a vacation.” A real vacation, in a place they own.
The calculation worked out completely differently.
When we closed the deal, Daniel said something that stayed with me: “For years we felt we were losing because we weren't buying in Israel. Now we feel we actually succeeded because we didn't buy.”
Sometimes the intuition of two smart people with a calculator is worth more than all the narratives about how “it doesn't pay to rent forever.”
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית