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There is no, repeat no, crisis

At least not in real estate, which shouldn't be given tax breaks

What, no crisis?

Can't be. Ridiculous. Everything is in crisis, especially everything with an economic flavor. From the government itself to economic growth, employment, tourism, hi-tech, startups, technology, communications, stocks, and of course real estate - it's all reeling, right?

Well, we beg to differ in at least one instance. Even though the "real estate crisis" is taken for granted, indeed predating all the rest in the financial press by years, its crisis is not a genuine one.

No crisis? But the Housing Minister, Natan Sharansky, constantly keens about the breakdown and demands steps to succor would-be homebuyers and support battered builders.

No crisis? But the Finance Minister, Silvan Shalom, named a panel that examined tax on real estate and came up with far-reaching recommendations that the minister actually supports (as opposed to the all-encompassing tax reform compiled by another team, that Shalom torpedoed).

No crisis? Day in and day out we read about contractors going broke, banks writing off massive debts and mortgage banks forced to increase provisions.

Well, the question is how crisis is defined, and mainly, whose is the eye of the beholder.

It's all a question of perspective
If the beholders are building entrepreneurs, who snapped up land in the last five years assuming that prices would continue to climb like in the early 1990s, there is a crisis, a horrible one.

Land prices are down throughout most of the country, leaving initiators stuck with massive tracts bought at prices that can't be rolled over onto buyers.

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If the beholders are the bankers, who failed to recognize the magnitude of the risks in the real estate sector and waxed generous with credit, the crisis is indeed dire. Bank Discount, for instance, was forced to the limits of its minimum capital ratio after setting aside hundreds of millions of shekels for bad debt on failed projects.

If the beholders are the nouveau riche who took out huge mortgages to buy bigger homes, paying only 10% to 20% in cash, the crisis is real enough. Many assumed that housing prices in Israel couldn't fall, and that if they couldn't make the payments, at worst they could sell the asset at a small profit.

Some even thought they could finance their mortgage payments thanks to their stock options and Nasdaq shares. This year not only have their fortunes shrunk at fiendish speed: they've also learned that their luxury dwelling is just another kind of asset, which can also decline in value.

But frankly, the personal troubles of certain builders, contractors and homebuyers do not a crisis make. Certainly not the kind of crisis for which the state should set up public panels or provide mortgage relief. Nobody forced these people to take risks and nobody should share in their pain.

It certainly isn't a crisis for new homebuyers
The panel set up to address real estate tax issues is uncalled for. Israel needs sweeping tax reform. There is no call to grant exemptions to the real estate sector. Why reduce betterment tax, but not income tax? Why lower sales taxes on housing, but not VAT?

The proposal to exempt the interest payable on mortgages from tax is regressive and unwarranted. Why acknowledge the public's interest costs, but not other costs? Why give a prize to people who took over burdensome mortgages, instead of helping people who are using their own money to buy housing, instead of borrowed funds?

It is hard to understand why the nation's leaders are bending over backwards to bail out the real estate sector. All it's undergoing is a natural process of adjustment. The market has shifted from high demand, after the tidal wave of immigration from the former Soviet states that increased Israel's population by 20%, to a more normal level.

From the perspective of new homebuyers, such as young couples, the market is improving. Housing prices have been consistently eroding, with increasingly beneficial terms to buyers.

Moreover, even the Bank of Israel's much-lambasted monetary policy has begun to show results. First inflation was tamed, which solved the painful problem of mortgages linked to consumer price indexes. Now long-term interest rates are falling, which reduces the interest component.

So, dear contractors and bankers, and their politician friends, please. There are plenty of crises to choose from. Spare us more wailing about the "real estate crisis". The very people you're supposed to be protecting think the real estate sector has never been in better condition.