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As young Haredi couples migrate south, Israel can reap benefits

Their migration just might spur the region’s development and growth
An ultra-Orthodox man seen walking in the Kiryat Yovel neighborhood in Jerusalem, on August 19, 2014. (Hadas Parush/Flash90)
An ultra-Orthodox man seen walking in the Kiryat Yovel neighborhood in Jerusalem, on August 19, 2014. (Hadas Parush/Flash90)

The housing crisis that has beset Israel for the last decade is felt acutely by all, and in particular — by young couples. In the last decade alone, the number of young couples owning an apartment has plummeted by a third.

Most young Israelis find it difficult to cope with this situation, but for young ultra-Orthodox couples the challenge is even greater. On the one hand, as the second (or even third) generation of the “society of scholars,” their ability to rely on financial assistance from their parents is much more limited than in the past; while at the same time, housing prices are far higher than they used to be. How do young ultra-Orthodox couples deal with this double bind?

Bnei Brak and Jerusalem are the traditional centers of the ultra-Orthodox community in Israel. It is here that the model of the society of scholars is preserved with the greatest fervor. For many of the younger generation, however, the new economic reality and soaring housing prices have made it impossible for them to continue to live in the old centers and have forced them to look elsewhere for housing solutions and jobs, mainly in Judea and Samaria and the periphery.

Between 2000 and 2014, there was a sharp upturn in the percentage of the ultra-Orthodox living over the Green Line, especially in the new ultra-Orthodox cities of Beitar Illit and Modi’in Illit. In 2000, only about 6% of all ultra-Orthodox 1st through 6th graders lived in these cities; by 2014 the figure had grown to more than a third of the total.

This sharp increase in can be attributed to the fact that housing prices were relatively low when these localities were new; in many cases it was possible to obtain the initial down payment (only tens of thousands of shekels) from a free-loan society (or from several of them), and take out a mortgage to cover the balance. In other words, the full price of the apartment could be raised by taking out loans —similar to the situation in the United States before the subprime mortgage crisis.

But just as in the United States before 2008, here in Israel the situation was not sustainable for the long term. The increase in borrowing and in debt reflected the steady contraction of ultra-Orthodox families’ liquid assets and a growing dependence on assistance from the outside. What is more, the mass migration to the new ultra-Orthodox towns on the West Bank caused prices to balloon there as well.

Whereas a decade ago apartments in these communities could be had for between 600,000 and 800,000 shekels, today the price range is more on the order of a million to a million and a half shekels.

Young ultra-Orthodox couples are forced to scrape together financing from new and sustainable sources and choose new and less expensive destinations for purchasing housing – such as the northern and southern periphery.

Recent years have seen a significant increase in the employment rate of ultra-Orthodox men and women and a sharp rise in enrollment in academic studies, along with a moderate decline in the birthrate. The employment rate of ultra-Orthodox men has increased by 51%; that of ultra-Orthodox women, by 73%. It is important to note that the employment rate of ultra-Orthodox men is significantly higher in the periphery than in the Jerusalem and Tel Aviv (i.e., Bnei Brak) districts — the opposite of the situation among other Israelis. A prime reason for this, as noted, is that the economic background of the young ultra-Orthodox families who move to less expensive towns is, on average, much weaker than that of those who remain in the old centers, and the need to make a living pushes them to join the labor force.

But this reality is misleading. The relatively high employment rates of young Haredi couples, who relocated to the northern and southern peripheries (compared to those living in Jerusalem and Bnei Brak who are less inclined to seek employment), does not stem from increased employment opportunities in the periphery but from the fact that those immigrating are those who are more inclined to seek employment in the first place.

Paradoxically, ultra-Orthodox who migrated to the northern and southern periphery experienced a sharp drop in their employment and income levels due to fewer employment opportunities and lower accessibility. In other words, while the increased ultra-Orthodox migration to the periphery did provide young couples with low-cost housing solutions, it also curtailed their employment options.

The most recent figures on home-buying point to a change of trend in ultra-Orthodox internal migration. Southern Israel is gradually replacing Judea and Samaria as the preferred destination. The numbers are clear and unmistakable: In the last few years, housing purchases by young ultra-Orthodox couples in the Southern District have been almost three times the figure in Judea and Samaria.

This new trend poses a challenge, but also an opportunity, especially given the geographic and demographic characteristics of the south. The state needs to gear up to absorb ultra-Orthodox families in the south (an area on which budgets have not been lavished in the past) providing them with the services they need as well as promoting suitable employment and economic infrastructure, so as to integrate the ultra-Orthodox newcomers into these locations in the best way possible and avoid the creation of a job situation similar to that in Judea and Samaria.

If the state is wise enough to prepare for these challenges, the ultra-Orthodox migration to the south would not only provide a viable housing option for this community, but could also potentially be a lever for the region’s accelerated development and growth.

About the Author
Dr. Eitan Regev is an economist and researcher at the Israel Democracy Institute. Dr. Regev is regarded as one of the leading experts in research of the ultra-Orthodox economy in Israel, and has published several seminal studies that help to shed light on key socioeconomic issues related to this sector.
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