Mako News has a report about a situation in Modiin...
A building project was sold as "Mechir L'mishtaken" - this is subsidized housing that is built to be sold cheaply. To qualify to buy one must meet criteria set by the government, usually including some combination of having low income, over a certain number of children, sometimes must have served in the army, never have previously owned a home, etc.
In Modiin a number of the apartments in the project were bought by haredim. Nothing wrong with that, except that they actually had no interest in living there. They were buying ti for the investment, and now, 2 years later, are turning around and selling those apartments for double what they paid.
The purpose of mechir l'mishtaken is not for people to find a great investment to make a killing off. it is to help weaker sectors buy apartments they need for living. The government gives these subsidies, encourages the cheaper prices, nto so people can make good money off the government, but for people who need to have a place to live in.
I am a capitalist like the next guy. I have no problem with a person putting down money and making an honest buck off it. I also have no problem with the government building more houses -people need to live and there is a shortage.
When the issue came up in bet Shemesh, I did not like it. I said then that why should the government subsidize the purchase of apartments when they did not subsidize it for me? And, what is to stop anybody from buying these apartments and turning around and selling them for double the price? All the while, they are decreasing my property value. If the housing was built and buyers paid full value, bvakasha. go ahead. But why subsidize housing that will let people just go make money off it?
So, now they are talking about adding criteria that would make a buyer hold the apartment for 10 years. According to the quote in the video, Housing Minister Arial Attias is against setting such a rule. I would add, in addition to a rule like that, that the buyer must live in the house for a period of x number of years (fill it in as 4 years, 5 years, 6 years, etc - the number does not really matter because if people would have to live there, they would only buy it if thats where they were willing to live.)
if the government didn't get involved in subsidized housing (and simply supplied ample land on which to build and a few zoning rules) you wouldn't need all these rules in the first place.
ReplyDeleteBen you're so right.
ReplyDeleteBut once the government wants to be in the mix, so have a rule that the apartment reverts to the government for the original purchase price if it's rented out or sold within the first 5 years.
What subsidies exist for the housing? From what I understand, the reason these houses are cheaper is due to the lower price the contractors pay for the land. There is no direct govt. subsidy or discount to the contractor.
ReplyDeleteI agree that there is a problem here, the government is subsidizing housing to help disadvantage people get a roof over their head, not so investors can make money and bring down hosuing proces.
ReplyDeleteBUT - why does this article focus on Charedim, the problem is widespread, not unique to Charedi investors.
Here in Modi'in there are also several army projects that are sold cheaply to army personelle, which can't be sold for a fixed number of years (I believe 5 years).
There is an army-project near my house, and all the real estate agents know exactly when the time period is up because many soldiers bought these as an investment to sell at the earliest opportunity - isn't that exactly the same as what this article crisizes the Charedi investors of doing?
Army housing projects are different for a number of reasons:
ReplyDelete1) The discounted housing is a perk for serving in the army beyond the regular number of years.
2)Because of the 5 year rule, the city of Modiin benefits from people buying these houses on paper (and going through the hassle of building and taking on all the risk this entails). And they can't flip it immediately, so this means they need to spend 5 years renting the house or least maintaining the houses enough so they can sell after 5 years. Either way, the neighborhood benefits from maintained/inhabited houses.
This situation bears no resemblance to the charedi situation, where a group bought homes cheap off of a developer desperate to sell and then flipped them.
(disclaimer: I live in one of these army houses where the landlord is desperate to sell)
Moshe - the fact that the land is sold much cheaper than land for regular housing (and thats what enables the prices to be lower) is in itself a major subsidy
ReplyDeleteMichael - true, it might be similar. I dont know what happened in the situation you mention (besides for what you and Abbi added), but perhaps there is a difference in that they at least lived there for 5 years?
ReplyDeleteIn the case of this report, they are flipping it after 2 years and they never had any intention to live there.
I don't get this. When we bought our apt here we got special lower interest rates on a portion of our mortgage as part of the olim benefits from the government. There is clearly a clause in there that says we have to LIVE IN the house for a certain number of years--and it's more than 5. 7 or even 10, maybe--or we have to repay that portion of the loan at regular rates, retroactive to the beginning of the loan. What were they thinking here?
ReplyDelete