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"In two months, the mortgage freeze will end, and then everything will collapse"
Appraiser Haim Atkin has long warned that there is a real estate bubble in Israel: "Prices will go down, banks will be nationalized." His recommendation: wait and not embark on long-term financial adventures
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Myrtle protects
Wednesday, 28 October 2020, 12:34
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Appraiser Haim Atkin can certainly be considered a prophet of rage.
For years he has been warning that there is a real estate bubble in Israel, but somehow in this period of the Corona, it sounds much more convincing. "In two months," he says, "the mortgage payment freeze will end, and then everything will collapse.
People do not have the ability to meet the mortgage payment.
Despite this, banks continued to distribute mortgages.
In March, an all-time high in mortgage mortgages - NIS 8.7 billion - was recorded because the public feared an increase in mortgage interest rates due to the corona.
It will explode in their face.
There can be no other way. "
On the other hand, everyone says that because of construction starts there is a shortage and therefore prices will go up because there is an excess demand for apartments.
" This is the biggest bluff of the decade, claiming there is a shortage of apartments.
There is a stock of apartments.
Even if the contractors do not build a single apartment in the coming years. "
For Atkin, the equation is very simple: many people will not be able to afford the mortgage payment, either because they were fired from their jobs, or because their business collapsed.
And since this is a mass of borrowers, it will lead to chaos.
"The Bank of Israel had to stop the crazy celebration. People came out of the first closure and bought apartments. The banks will fuel this industry without saying: We are growing a monster here. There can be no apartment in Petah Tikva or Ramat Gan that will cost a million dollars. There is no such animal. The OECD In 2015 he said: You have a real estate bubble.
They said then, what do they understand in Israel?
"All the extreme scenarios are warning of damage to financial stability as a result of which the real estate oath will explode, but it is hidden. Those who appear in the media are people who are pumping this bubble."
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Haim Atkin (Photo: Studio Glimps)
So what do you say: be prepared, because the bubble is going to burst in the coming months?
"Yes. There is going to be economic chaos here. We entered this crisis with a record real estate prices - both commercial and residential, and a record supply.
"There's a real estate run here. People are sitting and continuing to pump up the shortage of apartments and the fact that apartment prices will skyrocket. Where else will they jump?"
And all this because of the corona?
"The corona is not to blame. There are cycles in the market and the corona cannot be blamed for it. It has only accelerated it. If all the parties responsible for it blame the corona, I will be there to say it is not true."
Atkin claims that yesterday's world is gone and gone, because of the corona.
For him, even after a vaccine for corona is found, there will be no going back to the old world.
"The Corona has changed our perception of life. In terms of housing perception, many people will return to live with their parents, and office buildings will be converted into residential buildings. People will live in buildings in the form of small apartments, no kitchen and living room, and common public areas. That's where it goes. I said at the conference that a bank should not give a loan for an office building that could not be converted into a residence. "
I mean, even then you thought there was a surplus in the offices.
Why?
"Because Steve Jobs put our office and store in our pockets. We don't have to be in the office. Technology makes it redundant."
Before the corona you would come to the office.
"The offices are dead. It's a process that started to happen anyway, but the Corona has accelerated it."
Why do you think people will not want to go back to the office?
"Because after people see what it's like to work from home, they will not want to give it up. Do you think it makes sense, that I, who am now used to working from home, would ever want to go back to the office ?! Never. After tasting something you can not go back. The corona is not. A fleeting event.
Back to the offices?
Why, actually?
(Photo: Reuven Castro)
"It is true that Maccabi Transparent Hospital needs buildings, but the high-tech companies understood the idea. Every electricity company has been working from home for almost a year."
Maybe in small companies this is what it will be.
But income-producing real estate companies are reporting new contracts to the same extent. That is, they claim, companies that have rented offices from them, not only have not reduced real estate space, have even expanded.
"What do you want me to tell you? They're lying ?!"
Do you expect the big income-producing real estate companies to get into trouble?
"Look, Avi Musler, who was the CEO of Amot, is not an idiot. He did not just leave like that all of a sudden."
What will happen to the hotels?
"It's hard for me to say, whoever is already in the middle of construction, will not stop. The boom will be in logistics. I think there will be a great social revolution here because there is a whole generation that we slaughtered. Is a financial danger to banks? Absolutely yes. Can the state repeat the nationalization process? It is certainly possible. "
"In the 2008 crisis, I sent everyone to buy an apartment"
Atkin is not impressed by the various reviews that predict real estate price increases in Israel. I remind him that even in the 2008 crisis, when real estate prices worldwide fell, there was an expectation that real estate prices in Israel would also go through the same process and fall, but in practice real estate prices only Went up.
This, even though there was a general crisis even then, companies reduced the scope of their activities, others ceased operations, and of course - many employed people were fired.
Even then, ostensibly, the public had nothing to pay for the apartments they purchased.
The difference, says Atkin, is that then real estate prices in Israel were lower than the value, while today they are much higher than the value.
"In the 2008 crisis, I sent everyone to buy apartments," he says. "People bought apartments and received returns of 12%.
An apartment in Be'er Sheva cost NIS 150,000.
People also did it because they realized they would not have a pension.
Today, prices are 30% higher than the value, so they must fall. "In
Tel Aviv, too, prices will not rise?
" What suddenly ?!
Will fall by tens of percent.
Assaf Zamir (until recently Minister of Tourism, and MK on behalf of Blue and White) said (in an interview with Yedioth Ahronoth - "Tel Aviv": "Tel Aviv is falling apart."
Because the places of entertainment are not open at the moment? Even in New York almost not. So. Does that mean Tel Aviv and New York are falling apart, and fewer people will want to live in them?
"Certainly.
People say: I am willing to sleep under the sink and pay a lot because there is 'ice' here, but there is no more ice.
It's over, everyone is back in Dimona.
So what do I have to pay for?
I'll be back to parents.
People bought an apartment for investment and relied on young guys to finance the rent, but they went back to their parents.
Therefore, investors also sold apartments at a loss.
It's not me I said, it's the chief economist said.
"The world has changed, and it is difficult for people to understand it. People continue to think in yesterday's minds. Kahlon (Moshe Kahlon, former finance minister) came and showed that it is possible to sell at a lower price, and killed him. Bury the price per occupant."
Do you think Kahlon was right?
"He did great things, the problem that the price per occupant has become a kind of investment. Do you know how many winners have now sought to sell the properties they bought because they can't afford the mortgage payment? The problem is they signed a contract that they are not allowed to sell for five years."
Do great things.
Kahlon (Photo: Alex Kolomoisky)
"People got confused: leverage became bon ton"
The problem is that people went to real estate because the interest rate is zero and the money does not make money in the bank.
“What is wealth?
Wealth is a situation where you have more assets than liabilities.
Let's say you have a million shekels and you live in a rented house.
If you take that million and her mortgage, and buy an apartment with it, and pay more for her mortgage than you paid for the rent, then there are more liabilities than properties.
"People got confused: leverage has become a bon ton, everyone does it, probably when this model meets banks that distribute money. A bank that distributes mortgages in such a period of Corona does not really expect it to get the money. The second people stop paying, the market will crash."
The corona will come to an end sometime.
A vaccine will be found.
"The world you know is dead. It's very difficult with yesterday's mind to understand what tomorrow will be like. A young couple going to buy an apartment now, it's like killing two generations in Mecca. There's a whole generation of 40s and 50s taking money from their parents. ".
"They will make haircuts for mortgages"
What about someone who buys an apartment for investment?
"A bubble is the situation where the price moves away from the value. You get 1.5% -2% for a $ 1 million investment. For an investment of this magnitude you have to get 5% -6%, not 2%. You have to be dumb to do it. Intelligent investors have identified "It's and gone to all sorts of places in the world. The real estate market has become a market of long-term savings."
What is your rational behavior today?
"Not to make any investment in real estate. The last thing people need now is a long-term financial adventure. When two planes crash. "There is an event in the air, all flights are stopped. There is a dramatic event here, and the world as usual, because the banks know that as soon as they stop accepting money, everything will collapse."
What do you think will happen in a few months?
"Banks will have to make haircuts for mortgages. Those who have savings will be perceived as strong against the mortgage, but a young couple who all they have is an overdraft, 10,000 such couples who will burst the bubble and not vacate the apartments, the bank will have no choice but to make a haircut."
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