56% of those who sold their apartment 3 years after the purchase lost money.
95% of those who held it for 9 years earned
Real estate is not a stock market
Photography:
envato elements
Is it time to sell apartments you bought for investment?
The answer, in our opinion, is no.
If no available money is urgently needed, it is probably best to wait for better times.
There was an increase in the rate of dwellings sold at a loss during the second quarter, which may be explained, among other things, by the effects of the corona crisis on housing prices.
Another possible explanation may lie in the change in the mix of sellers, when a larger proportion of investors who have not yet managed to make a capital gain on the apartment rushed to sell it for fear of higher losses.
It is not recommended to invest in real estate, unless the vision is long-term. It is not a stock market. Analysis of investor sales by the holding period in the property shows that most of the sales that resulted in losses to investors were held for up to 3 years. Only 3 years from the date of acquisition, record a real capital loss.
The Ministry of Finance's economic report shows that in 2017, for example, only one-fifth of investors who sold their apartment within 3 years recorded a real capital loss. That is, in just 3 years (2020-2017) the proportion of apartments sold at a loss increased almost 3 times. Up to 3 years.
These findings may suggest that while during the boom in the real estate market the sharp price increases did not miss almost any property, whatever its location and quality will be, in recent years not only has the rate of price slowed, the price of quite a few properties even decreased.
A relatively high rate of loss-making sales was also recorded among those who owned the property between 3 and 6 years (a quarter of these sales resulted in a loss).
But note: those who owned the apartment for at least nine years, in only 5% of cases sold at a loss of real capital.
In the last 6 years, about 125,000 apartments have been purchased by investors, 13% of them in the Beer Sheva area, the investment capital.
All in all, the high rate of loss-making sales in the second quarter in the Beer Sheva area is due to a high rate of investors who chose to sell their apartment within a short period of time.
More than a third (35%) of the apartments sold in the second quarter in the Beer Sheva area (and also in the Nazareth area) were held by their owners for no more than 6 years (compared with a fifth at the national level).
In the segmentation of investors' sales according to their employment status following the corona (ie, the rate among those who were expelled or fired when the crisis broke out), it was found that in most areas there was no increase in this rate compared to the first two months 12% of sellers of apartments for investment.
The rate of loss-making sales among investors who went out to sell and sold their apartment in the second quarter is 2% higher than that recorded among all investors who sold their apartment in that quarter (16% vs. 14%), and 4% higher than in the first quarter.
Assuming that the investors excluded from the sale are not more pessimistic than the rest of the investors in relation to apartment prices, this finding may imply that the need to increase liquidity, even at the cost of selling at a loss, was among the factors behind these sales.
