Before deciding to move because of a few hundred more shekels a month, it is worth making every effort to reach an understanding with the landlord • In many cases, the move itself is much more expensive than the compromise that could have been reached • Real estate consultant Yaakov Reinitz on the decision that could potentially cost you thousands of shekels
The month of Av is the peak season for the rental market among the Haredi community: after Tisha B'Av, the year's big wave of moves begins, as families seek to move before the start of the school year, and at the same time, thousands of rental contracts signed in the month of Av last year are coming to an end.
This year, more than ever, the decision whether to stay or move could cost thousands of shekels.
The reason is simple: While the home-buying market is stagnant, the rental market in Haredi neighborhoods continues to burn. Many families are putting off buying a home because of high interest rates and uncertainty, but they still need a roof over their heads. The result is a growing demand for a limited number of rental apartments.
The problem is that supply is also shrinking. For years, investors provided a large portion of the rental housing stock, but in recent years many of them have exited the market, due to high interest rates, purchase taxes, and eroding yields.
Even the tens of thousands of new apartments being built across the country do not solve the problem, because most of them are intended for sale and not for rent.
The result is clearly felt in ultra-Orthodox cities.
•
In Beit Shemesh, we are seeing a real jump in rental prices. A three-room apartment is already approaching 6,000 shekels per month, an amount that reflects a mortgage repayment on a loan of about 1.2 million shekels.
The main reason is a shortage of rental apartments. Contrary to popular belief, there are currently not many investors in Beit Shemesh who own rental apartments. For a certain period, the market enjoyed a large inventory of apartments purchased under the "Price for the Tenant," but in the last two or three years, after the apartment owners were able to sell them, many of them have indeed been sold to families for residential purposes. The result: the supply of rental apartments has shrunk significantly, while demand is only increasing.
In Beitar Illit, too, there is a severe shortage. To what extent? The local newspaper says that residents are applying to receive rental ads even before the newspaper goes to print. With demand so high, every apartment that becomes available is snapped up in a short time. However, in Beitar, large construction projects are currently underway, and it is possible that the addition of apartments will help balance the market in the future. In Elad, too, with the progress of new construction, one can hope for an increase in supply.
The exception is Bnei Brak. While rental prices there are not falling, they are not soaring at the rate seen in other ultra-Orthodox cities. One reason for this is the continued increase in the number of housing units created through apartment subdivisions and illegal construction.
Despite the problematic nature of the phenomenon, in practice it increases the supply of apartments and moderates the increases.
•
The CBS data also shows an important point for every tenant. Those who stayed in their apartment and renewed their contract paid an average of only 2.6% more, while those who moved to another apartment paid an average of 6.6% more.
This gap is not accidental. It pays for an apartment owner to keep a good tenant, even at the cost of a more moderate increase. On the other hand, when the apartment becomes vacant, the price is immediately adjusted to the market level, and in today's haredi concentrations, this is already a very high market level.
Therefore, before deciding to move because of a few hundred more shekels a month, it is worth making every effort to reach an understanding with the landlord. In many cases, the move itself, along with the higher rent, transportation, brokerage and associated expenses - is much more expensive than the compromise that could have been reached.
And perhaps there is a broader message here: As long as thousands of families compete for the same limited stock of apartments in Beit Shemesh, Betar, Elad and other centers of demand, prices will continue to climb. Those who are willing to expand the boundaries of the sector a little and also examine developing Haredi cities in the periphery may discover not only lower rents, but also a better quality of life.
Ultimately, the rental market operates by one simple law: where everyone wants to live, everyone pays more.
• Yaakov Reinitz is a real estate consultant and lecturer. To schedule a consultation - Click here
