Why Johnny (and Yoni) can’t get a home of his own
Why Johnny (and Yoni) can’t get a home of his own

The hills of the Shomron (Samaria – in Northern Israel) were bedecked in lush green, accented by a rainbow of wildflowers, when my wife and I visited this spring. The whole trip conducted by the One Israel Fund was enjoyable and memorable -- from off-the-record talks with government officials to the viewing of wineries both ancient (from the Second Temple era) and modern (the Gvaot winery, which provided tastings of its award-winning cabernet blend).

What stuck with me most, however, was the tour of Kedumim, a community near the Biblical city of Shechem inhabited by people who, from what I could gather, are living purposeful and happy lives. Just one thing marred this oasis of contentment: an inadequate supply of housing. One longtime resident, herself a grandmother and great-grandmother (as well as busy optometrist), lamented that the younger generations, though they want to raise their families in the place they joyfully grew up, simply cannot find a place to live.

As our group stood at a promontory at the edge of a charming water park filled with children gleefully careening down water slides, somebody asked the town’s mayor, Hananel Durani, how long it’s been since new homes were built. “Eight years,” he replied.

Indeed, we saw a crop of “new” homes adjacent the park – apparently they had been sitting there unfinished for quite some time.

Those familiar with local and international politics (which, when it comes to Israel, is the same thing) probably immediately grasp that the problem was not a lack of concrete or other building supplies, nor of physical space. The problem is that the Israeli government, in deference to international opinion, is reluctant to permit new housing and deal with the consequent barrage of diplomatic repercussions from the U.S., EU, UN, etc.

To anyone who believes that Jews in Israel are entitled to basic civil rights like housing, the unjustness of the status quo is angering.

But as one who has professionally been involved in covering economic trends as a financial journalist for a couple of decades, Mayor Durani’s “eight years” comment instantly prompted this thought: The U.S. and world economy crashed in 2008, precisely eight years prior to the time I stood at that park in Kedumim. It was specifically the excesses of the U.S. housing market that triggered the crash, and I couldn’t estimate the voluminous number of discourses from economists and investment strategists I have seen or heard predicting a resumption of at least normal housing construction. That predicted recovery has yet to materialize, despite a supposed economic recovery according to official tabulations that begin in July 2009.

Please bear with me as I take us for a brief tour of the economic weeds. Year after year housing economists have predicted that trends in supply, demand and inventories all point to an imminent revitalization of the U.S. housing sector. For more than 50 years before the 2008 financial crisis, U.S. housing starts averaged more than 1.5 million units per year. Professional investors saw a big opportunity in housing in the years after the crash because they observed that a) median home prices fell substantially in relation to personal income; b) interest rates, and thus mortgage payments, fell dramatically in relation to personal income; and c) the population of millennials entering the family formation stage was surging.

Year after year investors heeding these analyses lost money as lift-off for housing never came. Housing construction (now up to 1.19 million monthly housing starts) remains far from its five-decade-long equilibrium level prior to eight years ago – though it should exceed that level based on today’s demographics, advantageous financing conditions and a “recovery” now in its eighth year.

But Johnny, despite being in his mid- to upper 20s, is either living with his parents or renting, and if he has a college degree, there’s a 40% chance he’s doing work for which a college degree is not required – and earning commensurately. Johnny’s inability to get a home has had enormous impact on the broader economy, as economists have long explained that housing has large knock-on effects on consumption. Renters are far less apt to visit Home Depot, furniture stores, art boutiques, etc.

Despite rock-bottom mortgage rates, home ownership levels have fallen to levels common in the early 1980s. Yes, there has been a surge in buying in recent years – but that has come from asset managers, hedge funds and foreign investors eager to collect rent from non-affluent millennials.

The government, meanwhile, has been heaping pressure on lending institutions to once again provide financing to those lacking adequate credit, thus planting the seeds of a redo of the last calamitous financial crisis. (This failure to achieve real lift off has occurred despite trillions of dollars of monetary and fiscal stimulus, the bill for which will eventually come due.)

Economists have racked their brains to resolve these paradoxes – why seemingly ideal conditions of a demographic surge and rock-bottom rates have failed to induce a recovery – and they have little to show for their efforts.

Maybe Johnny’s inability to obtain housing in Kansas is linked to Yoni’s difficulties in Kedumim.
But maybe the problem isn’t U.S. economic policy after all, but rather U.S. foreign policy. Maybe Johnny’s inability to obtain housing in Kansas is linked to Yoni’s difficulties in Kedumim. Scholars have endlessly debated theories of history; whether from Marx or Toynbee, such theories at best hold sway for a generation before the accumulation of facts prompts their dismissal. Historians’ track record is no better than that of economists.

There is however an alternative idea that the Biblically literate have seen borne out over millennia -- namely God’s promise in Gen. 12:3: “I will bless those who bless you and those who curse you I will curse.” History is replete with examples of nations that thrived in their hospitality to Jewish exiles, only to decline after later turning against them.

The United States exceeded all other nations in its benevolence to the Jewish people. Thus, according to this Biblical theory of history, it is no wonder that America has been blessed more than any other nation in history with wealth, power and prosperity. But in recent times, the U.S. has run out of steam at precisely the time Washington has turned a hostile face to Jerusalem (despite a generally pro-Israel American public). Starting in late 2007 (when the housing market started turning sour) and throughout 2008 during George W. Bush’s last year as president (coinciding with an economy in freefall), then Secretary of State Condoleeza Rice relentlessly pushed forward a radical diplomatic initiative to create a Palestinian terror state. Previous diplomatic efforts, even those that were ill-advised, generally sought to achieve peace on a step-by-step basis, but that proved impossible when the Palestinians failed to fulfill any of their obligations -- quite literally from Day One. Whether it was impatience, naiveté or something less positive than either of those, Rice decided to cut to the chase, putting the power and prestige of the United States behind an effort that, if successful, would deal a mortal blow to Israel.

Far from repairing this damage, starting in 2009 the incoming Obama administration’s anti-Israel fetish has been on open and egregious display on what has seemed like a daily basis. In all this time, the U.S. has tried everything it could think of to turn on the economy’s ignition, but the economy just won’t start.

All this yields the appearance of the U.S. running out of blessing – the subject of God’s promise to Abraham -- while in the meantime, neither Johnny nor Yoni can find a home.

Back to Kedumim -- the beautiful stone masonry and the wood work encompassing the water park were stunning. Mayor Durani said their construction was the gift of a contingent of visiting Christians from Orlando, Fla. “They built it with their own hands,” he related.

Americans have long held the world record for their generosity and good will towards others – and certainly to the Jewish people. It seems to this observer that Johnny and Yoni share genuine bonds of mutual affection, but that America’s political elites have done their utmost to turn the United States away from its pro-Israel moorings rooted since before the founding of the Republic, when America’s first generations deeply identified with the Biblical narrative and its Jewish protagonists.

Certainly professional economists will scoff at this interpretation of America’s housing woes. But the record of their own theories and forecasts has been nothing short of abysmal. At a time when the American public’s disaffection with their political leadership, and dissatisfaction with the economy, has reached all-time highs, Americans will need to work – “with their own hands” – to hold their political leaders accountable to perform the voters’ will. While political and media elites may think otherwise, Johnny has nothing against Yoni enjoying a home of his own too.

Gil Weinreich is author of “Superpower,” newly released by Targum Press. The book examines Israel’s rising power, and the vital spiritual dimension underlying this shift, contrasting this experience with the hollowing-out trend, materially and morally, underway in the United States -- while making constructive suggestions for reversing this latter trend.