The global financial crisis has left Israel's real estate market with a problem most U.S. homeowners only dream about: Property values are rising too

Rising demand pushed the average home price to about $250,000. In Tel Aviv, prices have risen 46% since the end of 2008 to an average of nearly $600,000 for a three-bedroom home. Jerusalem is up 15% this year to an average price of about $415,000.

That's good news for homeowners, who watched property values fall in the 1990s and again during the 2001-03 Palestinian uprising and the 2006 Lebanon war. On average over the last decade, Israeli home prices have risen about 3% a year.

But the recent surge in prices has made life difficult for many Israelis, especially first-time homebuyers.

"Real estate prices in Israel, particularly in Jerusalem, are simply crazy," said Yoni Shoshana, 26, who is married and has one child. He spent months looking at dozens of apartments until he finally found a two-bedroom unit for $235,000. His secret? Perseverance and prayer, he said.