Few people know about the pyramids of haredi (ultra-orthodox) free-loan societies (Gma"chim), 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 haredim 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 haredi 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 haredi 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 haredi'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 haredi sector. Over the past decade, while the average Israeli family dreamed of a large apartment in a good neighborhood, haredi 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 Jerusalem or Bnei Brak.
The result is that haredim without extreme political views migrated to the territories, to new towns such as Betar Illit and Modi'in Illit-Kiryat Sefer. Without meaning to, haredim have become a critical mass of new settlers over the past 20 years.
However, Prime Minister Benjamin 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 Jerusalem and Bnei Brak attracts haredim with slightly, and only slightly, deeper pockets to Beit Shemesh. Several weeks ago, Minister of Housing and Construction Ariel Atias, a member of the haredi political party Shas, took care to publish a tender for 1,400 lots in the town's Ramat Beit Shemesh neighborhood exclusively for haredim. 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 haredi-only tender.
Ashdod is also slowly leaving the haredi housing 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 haredi 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 haredi 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 Sabbath, 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 haredi 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, haredim are already deep in the heart of the problem. While the flames of this frustration are currently directed at outsiders - Intel's fab in Jerusalem 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 haredi 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.
Published by Globes [online], Israel business news - www.globes-online.com - on December 28, 2009
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