Home prices in Kiryat Shmona are down 5-15% since 2023

‘The city is dead’: Israel’s north struggles to recover as war leaves uneven economic scars

In Kiryat Shmona and across the Galilee, shuttered businesses, slow returns and shifting demand for homes indicate a patchy recovery after more than two years of conflict

KIRYAT SHMONA — Driving along Tel-Hai Street, the main commercial strip of this northern city, storefronts were open on a recent weekday afternoon, and cafes and shawarma stands were busy.

But just beyond the front line of shops, a different picture emerged, showing the pain that the “capital of the north” has endured through more than two years of war.

Some commercial areas were almost completely shuttered due to a lack of customers. Temporary missile shelters, known in Hebrew as miguniot, have been erected on virtually every street corner, providing emergency respite when sirens give residents just 15 seconds to run for cover from Hezbollah rockets. A high-tech incubator near the top of the strip, once bustling with innovation, is now nearly empty.

There aren’t many damaged homes around anymore, since most of those hit during the 2024 war have already been repaired, residents say. The latest round of fighting in March and April, currently halted by a fragile ceasefire as of this writing, has caused some new damage, farther off the strip. But the holes in residents’ lives, and in the local economy, will take much longer to fix.

“Before the war, this area was full of people, and businesses were making good money,” said Eldar, a barber, sitting outside his salon waiting for customers. “Now, almost all of the stores in this area are closed, the city is dead, and no one goes out at night.”

More than 900 days after the October 7, 2023, Hamas attack that triggered the war — and after repeated rounds of fighting along the northern border — recovery in Israel’s north remains uneven. While some areas are rebounding, others, particularly communities near the Lebanon border like Kiryat Shmona, continue to face deep economic and demographic challenges.

“When you talk about the housing market in the north, you really have to divide it into two categories,” said Nimrod Bousso, chief editor at the Israeli Real Estate Center website. “In the places on the front lines of fighting, where people were evacuated during the war, real estate activity is very low, and most construction projects are on hold. But for areas that aren’t being directly targeted, like many towns in the Golan Heights, agents say that sales volume has returned to normal.”

In those places, Bousso said, “there is a sense that we are getting back to some sort of routine.”

Slow recovery in the Galilee

Kiryat Shmona, just over a mile from the border, is in the first category of very slow recovery. Shortly after Hamas launched its war against Israel on October 7, 2023, Israel evacuated the city’s 24,000 residents in anticipation of military conflict with Hezbollah in Lebanon.

Government stipends paid for them to relocate to homes in other parts of the country during that time, and government grants covered damages to people’s homes from the constant barrages of rockets, missiles and drones. But economic activity in the region all but ceased.

Of 104 tech startups operating in the Galilee before the war, only three survived the war, as human resources were scattered around the country and lost focus, noted Noam Josef, head of the Margalit Startup City Galil innovation center, which seeks to represent technology interests in the region.

The local housing market also suffered greatly during that time, noted Tzahi Hafzadi, who manages the Kiryat Shmona office of Remax Realty.

“Things were pretty slow then,” said Hafzadi, who grew up in the city. “It wasn’t exactly zero, but it was close to that.”

But when permission was finally given to return in March 2025, many residents said they didn’t plan to come back. Only about 60% of Kiryat Shmona’s residents have returned to the city, and about half of local businesses have reopened, official data shows.

“A lot of people decided to stay where they were instead of coming back,” Hafzadi said. “There is cautious growth in the real estate market now, but prices have come down since before the war.”

Homes in new buildings cost about 5% less than before the war, while those in older buildings, without any shelters or elevators, are down about 15%, Hafzadi said.

Family apartments of 70-90 square meters (750-970 square feet) start as low as NIS 600,000 (about $200,000), while large private houses on 500 square-meter (1,640 square-foot) lots can go for as much as NIS 3.5 million ($1.17 million), he noted.

Things are starting to improve, Hafzadi said. Young families are showing new interest in the city, especially those who can work remotely, and the government offers significant economic incentives for people moving there.

Residents can pay no income tax on income of up to NIS 20,000 per month, and a recent government decision will provide new families with grants of NIS 2,500 a month for two years, Hafzadi said. Childcare is also subsidized, and the cost of living is lower than in the center of the country, he added.

Meanwhile, tech is slowly making a comeback in the Galilee, with 20 new companies formed in the past year, Josef noted. Margalit Startup City Galil is planning a major “business revival” conference in late May to galvanize political support and spread the organization’s optimism for the region, he said.

The government has also pledged to invest billions of shekels in rehabilitating the region, although locals say they haven’t seen much benefit from that yet. There are plans to extend the country’s main railroad line to Kiryat Shmona in the coming years, a move that will ease transportation to the center and open a new world of employment options.

There have been initial talks to develop housing specifically for English-speaking immigrants, although that plan is moving slowly, representatives from Nefesh B’Nefesh have said. And the city’s Tel Hai College is set to be expanded into a full-fledged university in the coming years.

“People who move here can benefit from living in a beautiful place with no traffic, and they get a higher salary because the income tax is lower,” Hafzadi said. “I would definitely invest here. I think it’s going to get better and better.”

Stronger demand in the Golan

The situation is a bit different in the Golan Heights, where price changes since the October 7 attack have been more in line with the rest of the country, said Avigail Fink, who heads Remax’s offices there.

The housing market there saw a significant boom post-COVID, driven by remote work and positive immigration, with prices rising from 2021 to 2023, Fink said. A 2021 government decision allocated about a billion shekels to double the area’s population from about 50,000 by increasing infrastructure investments, attracting a new cadre of investors and developers.

But when the war broke out, everything froze, and since then, prices have remained stable or fallen slightly. Structural challenges to the Israeli market, including high prices, high interest rates, and a record-breaking supply of new housing, have tempered growth, leading to an average price decline of about 1% over the past year.

Since Israel reached a ceasefire with Hamas in October, prices have been gradually climbing, Fink said, and homes take a bit longer to sell now than they did before the war. The numbers are small — there are typically only about 300 homes on the market in all of the Golan at any given time, Fink said — but there is a prevailing sense that the worst is behind them.

Unlike in the Galilee, Golan towns weren’t evacuated after the October 7 attacks, a decision that Fink credits for their current comparative strength. Tourism, one of the Golan’s main economic engines, suffered greatly during the war, but the housing market is much better off due to residents’ decision to stay, Fink said.

“We expect that 2,000 homes are going to be sold in Katzrin during the next 1-3 years, and this will lead to major changes in market demand and places of work,” Fink said. “I think the market here is going to change tremendously for the best in the next few years.”

Moving forward, some areas are going to develop faster than others, said Michal Korland, a Remax realtor specializing in the Galilee. Cities along the coast like Nahariya, Akko and Shlomi lie farther from the Lebanese border than Kiryat Shmona, and fared comparatively better during the war.

Nahariya already has hospital facilities and train access, and the expected completion of Route 6 — Israel’s main north-south highway — to the area within one to two years could accelerate a rebound, Korland noted.

“When things are quiet, this area will be a great opportunity for investors,” she said. “The north is the nicest place to live in Israel, with amazing people and a great quality of life. We’ll need a lot of help from the government over the next few years, but we hope that we’ll start seeing big things happen soon.”