The Dollar Is Down. Don’t Let Your Buying Power Fall With It.

By Davi Katz

The dollar may be slumping, but Israel’s real estate market hasn’t lost its shine. In fact, the shekel’s surge, now at its strongest levels in three decades, has created a new kind of tension for American buyers: the kind that turns a once-attainable apartment into a pricier fantasy almost overnight. With every movement in the USD-NIS exchange rate, purchasing power shifts, budgets stretch, and dreams of that Jerusalem penthouse or Modiin duplex can suddenly feel farther away.

But here’s the twist: A tighter currency market doesn’t mean a closed market. Far from it. Developers, banks and savvy financing professionals have rolled out a range of tools designed to help foreign buyers navigate volatility instead of getting crushed by it. For those willing to think strategically, this can still be the right time to make a move.

One of the most attractive incentives emerging in firsthand purchases directly from developers is exchange-rate protection. Developers eager to reignite sluggish sales are offering fixed USD-NIS exchange-rate benchmarks on significant portions of the purchase price—sometimes as much as 60%.

Imagine buying a 3 million NIS apartment. If 60% of the purchase price is locked at an exchange rate of 3.30-3.40 NIS to the dollar, the dollar cost of that portion stays around $545,000. At a rate below 3.00, that same amount could otherwise cost closer to $600,000 or more. That difference can have a major impact on a buyer’s overall budget.

Another major perk of buying new construction is the flexibility of payment schedules. Terms such as 10/90 or 20/80 allow buyers to convert only a relatively small portion of their dollars today while pushing the bulk of their payments into the future. That flexibility can be particularly valuable when the dollar is weak: You are locking in today’s property price while delaying much of your currency exposure. If the dollar strengthens before the larger payment is due, the eventual dollar cost could become more favorable. Of course, exchange rates can move in either direction, but the key advantage is that the buyer isn’t forced to convert the entire purchase price at today’s rate. In other words, you’re buying time. And in a currency market, time can be an extremely valuable financial tool.

Then there’s the increasingly popular back-to-back loan strategy, which has become attractive for buyers who have the dollars but hesitate to convert them at today’s exchange rate.

Here’s how it can work: A buyer deposits USD into an Israeli bank account or CD that earns interest, potentially in the range of 4%-4.5%, depending on the product and prevailing rates. The bank can then provide a NIS loan against the dollar deposit, sometimes for up to 90% of its value. The bank maintains a cushion to protect itself if the dollar declines further. If the NIS loan costs around 5% while the USD deposit earns approximately 4%-4.5%, the effective spread can be relatively small—roughly 0.5%-1%, before considering taxes, fees and other terms. The buyer can use the NIS financing for a down payment and potentially other purchase-related expenses while keeping the original dollars intact. That strategy doesn’t eliminate risk but for the right buyer, it can provide something extremely valuable: breathing room. Instead of converting a large amount of dollars when the exchange rate is unfavorable, the buyer can preserve the foreign currency and create additional time to determine when and how to convert it.

Even buyers who never planned to take a mortgage are now looking more seriously at financing options. Bridge loans, for example, can provide temporary financing for as long as two years in certain circumstances, allowing buyers to enter the market now while delaying the need to convert additional dollars. For foreign buyers, financing is usually capped at 50%, but by opting for a bridge loan it will allow you to delay converting all of your funds today.

Of course, sometimes the smartest strategy isn’t financial engineering—it’s adjusting expectations. With Anglo-heavy neighborhoods in Jerusalem, Beit Shemesh and Modiin increasingly feeling out of reach for some American buyers, more purchasers are exploring emerging or lower-cost markets such as Lod, Tiberias and Nahariya. These areas can offer lower entry prices and a broader selection of properties. That doesn’t mean currency conversion suddenly stops mattering. A weak dollar still makes every shekel more expensive for an American buyer. But when the underlying property costs significantly less, the overall financial hurdle can become much more manageable. For buyers willing to look beyond the traditional Anglo markets, this can open doors that might otherwise remain closed.

The low USD-NIS exchange rate has undeniably reshaped the Israeli real estate landscape for American buyers. It has reduced purchasing power, changed buyer behavior, and forced many prospective purchasers to reconsider how—and where—they invest.

Buying property in Israel isn’t out of reach; you just need a smarter financing strategy. Instead of taking a direct hit on current exchange rates, you can soften the blow using rate locks, deferred developer payments or back-to-back loans. Don’t get hyper-focused on the shekel sticker price. If you’re an American buyer waiting for the dollar to bounce back, you might be waiting a long time. The smarter play is structuring the deal so today’s exchange rate doesn’t derail you in the first place.

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Davi Katz, CEO of Katz Mortgage Group, has been guiding the Anglo community through Israel’s financing maze since 2007, with more than 1,500 satisfied clients. In a market this dynamic, experience isn’t just helpful—it’s essential. The currency may be working against buyers today, but with the right strategy, it doesn’t have to stop them.