You woke up in the morning and were told that a distant aunt you did not know left you an apartment.
"where?"
You ask, "In New York," they answer you.
At this point you probably would not say "I wish I would have inherited an apartment in a place with lower housing prices".
Unlike consumer goods like clothes, food or even cars, apartments have value even after decades, and that value even goes up.
In this sense, apartments are more similar to stocks or pension funds.
Their increase in value indicates something good.
Young people who complain about housing prices for some reason are not happy to persuade their parents to sell their apartment for $ 100,000, the amount they paid for it 30 years ago.
In Israel, everyone wants housing prices to fall, but not for their own apartment.
The struggle to lower housing prices is an egoistic struggle.
There is nothing wrong with that in itself.
The struggle to lower the cost of living in consumer goods is also selfish, but the difference is that while falling food prices, clothing, communications and transportation produce net value to the individual and the economy, artificial attempts to lower apartment prices are destructive to the individual and the economy.
To understand why the price of housing, or rather, the value of apartments is high, we must go back thousands of years.
With the onset of the agricultural revolution people began to store their wheat together and trade in a central area.
These places, which have become city centers, have become sought after and expensive because human density creates value.
Denser cities are cities that give more value to their residents and visitors.
Crowded cities allow for human diversity, which produces diverse demand and diverse jobs at high wages, which in turn increases the value of assets and their price.
We will take Tel Aviv as a dense and central city.
Why do young people flock to it?
Tel Aviv is home to the centers of the world's largest high-tech companies, reputable law firms and accountants, and the most intriguing restaurants.
Of course, this is not just about work and consumption.
Crowded cities have a maximum of single men and women per square kilometer, better hospitals and a higher life expectancy.
Cities produce a lot of value for their residents, which raises the value of real estate and property prices. An attempt to lower the price can only succeed if there is a destruction of value. Suppose tomorrow they decide on a maximum wage, a populist finance minister will come and say - a programmer must not earn more than 20 A thousand shekels a month, or high-tech companies are not allowed to open offices here. The next day, rental and apartment prices will fall.
It sounds delusional, but it's exactly what they're trying to do with a short-term rental ban, a law that is a sure recipe for job destruction and value.
Another proposal is rent control, a proposal that has failed everywhere in the world, created queues of years and hurt economic efficiency.
If the same high-tech programmer can not find an apartment because the inspectorate creates queues, he may leave abroad. With a state subsidy, it will still be sold in the future or rented at market prices.
So if the price of apartments can only go down through a mechanism of value destruction, what do we do?
The answer is that value is produced.
Tel Aviv is crowded, but not crowded enough.
Tel Aviv is less crowded than many European capitals.
Urban renewal projects will attract more and more productive and creative people to the city, which will increase diversity and wages.
It will not lower prices, but it will increase value and quality of life.
Another solution is transportation.
Israel is much more connected than it was two decades ago.
In Sderot, for example, high-rise buildings are being built thanks to the train station and new roads, and prices there indicate that congestion and transportation accessibility are stronger than Qassams.
Sderot knows that apartment prices are a result of value, a rate that young people in Tel Aviv have not yet learned.
Were we wrong?
Fixed!
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