Chareidi Housing Crisis May Indicate Larger Trend

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chareidimThe following is from a report in Globes: Few people know about the pyramids of chareidi free-loan societies (gemachim), charitable funds which do not necessarily rely on generosity of donors (whose numbers have diminished in the past couple of years), but which answer the question: how do chareidim pay for the apartments that they buy for their large numbers of children?

To obtain money (tens of thousands of dollars) from a free-loan society, partly as a loan and partly as a grant, the average chareidi borrower puts aside a much smaller sum (a few dozen dollars) toward the free-loan society when a child is born or shortly thereafter. In this way, money coming in from young parents immediately goes out to older parents who have to marry off a child. With the chareidi population’s impressive growth rate (about 6% per year) the model has worked marvelously as the pyramid has a growing base.

The problem is that in these difficult times, even putting aside a few dozen dollars is not a simple task. At the same time, the dollar model is no longer enough to buy an apartment priced in shekels, and in the absence of a steady expansion by the free-loan society, both because of the lack of cash and the lack of a guarantee that the parents will be able to withdraw the money when the time comes, the chareidi‘s financial – and real estate – model is hanging by a thread.

The problem is not only dwindling cash. The supply side of the equation also poses difficulty in finding solutions for the chareidi sector. Over the past decade, while the average Israeli family dreamed of a large apartment in a good neighborhood, chareidi neighborhoods have grown increasingly crowded and dilapidated, with apartments costing NIS 500,000-600,000, where virtually the only criteria have been the price per square meter and proximity to parents in Yerushalayim or Bnei Brak.

The result is that chareidim without extreme political views migrated to the territories, to new towns such as Betar Illit and Modi’in Illit-Kiryat Sefer. Without meaning to, chareidim have become a critical mass of new settlers over the past 20 years.

However, Prime Minister Binyamin Netanyahu’s decision to freeze construction in the settlements for ten months, and the de facto freeze in place for months already, disrupted the haredi construction boom in the West Bank.

At the same time, cheap housing prices and the proximity to Yerushalayim and Bnei Brak attracts chareidim with slightly, and only slightly, deeper pockets to Beit Shemesh. Several weeks ago, Minister of Housing and Construction Ariel Atias, a member of the chareidi political party Shas, took care to publish a tender for 1,400 lots in the town’s Ramat Beit Shemesh neighborhood exclusively for chareidim. The winning contractor will be picked exclusively based on the lowest bids per apartment. Veteran Beit Shemesh veterans took exception to the tender, and in response to a petition, the courts issued an injunction against the chareidi-only tender.

Ashdod is also slowly leaving the chareidihousing scene, as prices climb and new land becomes increasing scarce.

Atias hopes salvation will come from the new town Harish in Wadi Ara; the city is planned to have 150,000 chareidi residents. The obstacle is the strong farming lobby which has protected kibbutz land – held by Metzer, Ma’anit, Barkai, and others – in the area for decades. They refuse to hand over land for a chareidi city, which in any case will not provide an immediate solution to the community’s housing shortage.

To further inflame the situation, an older ruling in Jewish law was revived, banning the use of elevators on the Shabbos, which aggravates haredi housing in buildings of more than three or four floors. Only in the hill towns, such as Kiryat Sefer or Beit Shemesh, does the topography make it possible to have the entrance in the middle of a high-rise; elsewhere, the entrance is on the ground floor.

All this is intended as a glimpse into the chareidi courtyard, along with a reminder that their plight is very close to us. While Israelis continue to complain and throng housing fairs and sales sites, chareidim are already deep in the heart of the problem. While the flames of this frustration are currently directed at outsiders – Intel’s fab in Yerushalayim comes to mind the problem exists, and it pays to closely follow the handling of the community’s most explosive problem.

We’ve been searching intently for the weak link in the chain, for the item that threatens the soaring house of cards. Housing prices and demand for initial capital are simply no longer within reach of most young couples with whom we’ve spoken.

We conclude that we had better pay attention to the distress in the chareidi housing market. We had better consider that it can be the initial detonation which can ignite, faster than we imagine, the entire Israeli housing market. We have more and more signs that the breaking point in the haredi community is approaching, which stands helpless more than others in the face of too many changes too fast in the past couple of years.

We’re next.

{Globes/Yair Alpert-Matzav.com Israel}


3 COMMENTS

  1. the housing crisis is not only a chareidi issue.
    i have spoken to secular israeli that migrated to the usa and what i hear over and over againis how would i be able to get married and by an apartmeny in israel on an israeli salary!
    I dont know the exact figures on israelis living abroad but they seem to be everywhere. not just traveling, but working, going to college and making a life for themselves there on a permanent basis. it seems like at least 10% of the israeli jews are outlide the country. if 10% of americans were living overseas that would mean around 30 million, there were be a great outrage in the political world. but in israel it is accepted without a blink of the eye
    why arent there apartment housing as there are in other countries where not everyone can afford buying a home especially where starting out as a newly married couple!!!! its unheard of in usa and other counties where the parents have to come up with such a large sum of money to help chidren buy an apartment
    are the tax laws made up so that there is no apartment rental business that are so common in the rest of the world!!
    for the sake of all israelis both secular and religious let the govenment make this a big issue so that rental housing is an option
    yaacov shapiro
    jerusalem

  2. There is one and only one real actual new project that will be brought to fruition shortly and start marketing. That is Achisamach – part of Lod municipality. The project consists of a total of 3 to 4 thousand units and is starting with 1600 units to be sold at cost price. The people behind it are real serious people (which is why they intentionally keep away from the press & poloticians – anyone else wouldve been splashed all over the place by now) and astronomical sums of money have already been invested in land acquisition and city planning etc. The location is great. Its in the green line and only 30 min drive from Jrslm all along proper wide highways and 15 min from Bnei Brak. There is talk of establishing a train stop on the new Tel Aviv- Jerusalem speed train that is under construction (said to complete in another few yrs). If this materializes, it will then be an 18 minute train ride to Jerusalem – traffic free!! I am surprised at Matzav for not covering this. It has leaked to the press numerous times. The urban plans are gorgeous with plenty of green areas with a creek running through it. There was tremendous efforts invested in the planning and the units are designed with taste and practicality incl room size that exceed the norm. The prices are said to be much lower than anywhere else as it truly is a non-profit project. May these good Jews have Siyata Dishmaya to bring this huge project to full fruition and may it set an example for future undertakings.

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