They say the cost of living is spiraling beyond reason in Israel, and if you thought that just applied to trendy Tel Aviv, think again. Ambassador Tom Nides moved into a sleekly renovated villa in west Jerusalem’s leafy German Colony sometime last spring and local real estate agents estimate its value at about $23 million. Its owner and the embassy confirmed it is being leased as the U.S. envoy’s official residence, the Associated Press reported.

There’s no plaque on the gate of the U.S. ambassador’s new Jerusalem residence, no Stars and Stripes visible, and no official listing as a notable overseas property.

The official residence of the American envoy is a rental and temporary, officials said, secured after two years of house-hunting in the wake of President Trump’s decision to move the U.S. Embassy to Jerusalem from Tel Aviv.

Emek Refaim Street is the latest stop for the American ambassador’s home on a more than three-year migration to tension-filled Jerusalem from the seaside cliffs north of Tel Aviv. The journey reflects the Trump administration’s divisive legacy and the reluctance of President Biden — who will visit the region next month — to roil relations with Israel over the issue.

Mr. Trump upended decades of U.S. policy by recognizing Jerusalem as Israel’s capital in 2017, drawing plaudits from many Israelis and infuriating the Palestinians.

Israel captured east Jerusalem in the 1967 Mideast war and annexed it in a move not recognized internationally. The Palestinians want east Jerusalem to be the capital of their future state. Most countries maintain embassies in Tel Aviv because of the long-running dispute.

Mr. Trump moved the U.S. Embassy from Tel Aviv, and with it the storied residence of the U.S. ambassador. Under various presidents, the envoy had previously been housed in a sprawling, five-bedroom seaside compound built on an acre of land, which Israel gave the United States soon after independence in 1948.

The previous residence was a social hub for relations between the two close allies. It was known for its July Fourth blowouts, when thousands of specially invited guests would watch the sunset and fireworks over the Mediterranean Sea.

Mr. Trump’s move put an end to all that. The United States sold the property for more than $67 million, according to official Israeli records. The State Department refused to release key details of the sale, but the Israeli business newspaper Globes identified the buyer as one of Mr. Trump’s biggest contributors, Sheldon Adelson, a U.S. casino magnate who died in 2021.

The cliffside compound appeared little changed from outside the walls on a recent day. Two Israeli flags waved from the flagpoles in the sea breeze. A spokesman for the Adelson family declined to comment.

The decision to sell the residence appears to have been aimed at preventing any future president from reversing the embassy move, something Mr. Biden has long ruled out.

But it also forced U.S. diplomats stationed in the region — most of whom continued working in Tel Aviv — to embark on a difficult search for new digs.

When Mr. Nides arrived last December, the plight of the “homeless ambassador” was the talk of diplomatic circles. There simply weren’t many options in crowded Jerusalem for a compound large and secure enough to serve as a U.S. ambassador’s official residence.

In most countries, the official residence is not only the ambassador’s home, but a place for official ceremonies and social gatherings. A cramped apartment simply won’t do.

Mr. Nides initially moved into the Waldorf Astoria in Jerusalem, a tony enough address but not living quarters suited for entertaining. Sometime this past spring, he moved to the property in the German Colony, one of the most sought-after neighborhoods in Jerusalem.

The U.S. is leasing it and has notified Israel that the property will be the official residence for the American envoy, according to the embassy. Other terms of the arrangement have not been made public, but there are no plans to move the ambassador to another site. Officials from both countries, as well as the owner, declined to comment on the property’s value or its monthly rent.

If the intent was to keep the residence low-profile, that’s over too. On June 8, Mr. Nides tweeted a photo from his “new neighborhood coffee shop in the German colony.” His residence is surrounded by a tall white fence and dotted with security cameras. Guards can often be seen, according to local shop owners. When a gate opens, looky-loos can catch glimpses of a parking area and courtyard.

The legal counsel for the owner, Blue Marble Ltd., Arielle Cohen, doesn’t dispute local reports that the company spent about $14.5 million on the historic restoration. Her father, Avi Ruimi, grew up in the German Colony and founded the company, which specializes in historic restorations and owns several other addresses on the street.

Blue Marble bought the property in 2004. Construction lasted six years and finished in 2020, as it became clear that the U.S. ambassador would need a new home.

“We knew it was a possibility,” Ms. Cohen said in an interview. She declined to comment on the signing process but called the contract a “wonderful milestone.” She said the residence itself is about 6,000 square feet with a second building that roughly doubles the size.

A gallery on the company’s website says one building includes two apartments and commercial space. The second is “a beautiful private villa.” A portfolio on Blue Marble’s website shows a sleekly renovated interior, with a modern kitchen, fixtures, and high ceilings.

Local press have reported that the property dates to 1930 and was built by a wealthy Palestinian family. West Jerusalem was home to a number of upscale Palestinian neighborhoods known for their stone villas before the 1948 war surrounding Israel’s creation.

The residence housed unmarried British police officers during the British mandate prior to 1948, and has also been used as a fire station, school, and flower shop over the years.

It’s unclear whether Mr. Biden will visit the residence during his brief stopover in Israel next month.