As the economic crisis hits home, the popularity of purchasing groups has grown, including in the ultra-Orthodox community. There, gigantic groups numbering 150 members or more congregate in a matter of weeks, and not always with some real estate entrepreneur in the center of the action.
Yeshiva leaders and spiritual leaders may well be the ones linking like people in their community to help them buy homes at more affordable prices.
The affinity linking the group may be the status of the yeshiva or Hassidic sect - the equivalent of secular purchasing groups based on high-tech or air force careers. This is the solution for people who want to live with their own kind.
"Almost all projects in the Haredi sector are done through purchasing groups these days," says Hanoch Kess, CEO of Hish Nofei Yisrael, which builds and sells housing to the ultra-Orthodox community. In the last half-year he's organized three buying groups and attributes their popularity not only to like living with like, but to the economic crisis as well.
"No question about it," Kess said. "This is a story of the economic meltdown. The worse the credit crunch becomes and the more the banks want [the builders] to sell apartments quickly, the more buying groups become the only option to finance housing projects."
Hish Nofei Yisrael had bought land from the Housing Ministry to build 120 apartments in Givat Ze'ev. But the banks would only lend money for the project after the company proved it had already pre-sold half the apartments, Kess said.
It's easier to organize buying groups in the ultra-Orthodox community than in the secular one, Kess said.
"The Haredim are more organized, they know each other. A rabbi leads the project and gives it his approval, which makes it easier to win the trust of buyers. It's very easy to persuade a Haredi to buy an apartment together with a purchasing group."
Numerically there have been a lot more secular groups than ultra-Orthodox ones so far, but the secular ones tend to be smaller. A group of 100 is large in the secular world, and few reach the dimensions of the ultra-Orthodox group, which can number 150 members in a single project - or even as many as 400.
Again, the explanation lies in social cohesiveness. Without resorting to advertising or aggressive public relations, the group's organizers can reach the target group much more easily than a builder can reach diverse clients. It takes some buzz in the Haredi press, says Kess, and people telling one another in synagogue.
"The ultra-Orthodox public knows everything about itself. All Haredim know when a purchasing group is organizing," Kess says. If anything, small groups don't work, he says.
The moment a collective project has the blessing of the rabbis and gets mentioned in the Haredi press, it's "in" and the apartments sell like hotcakes, he says.
The Haredi press supports the concept of purchasing groups, seeing it as a way to relieve the perennial shortage of housing in the fast-growing ultra-Orthodox community. Not a day passes without a mention of the problem in the papers. Not only is the birthrate in the Haredi community high, the population tends to be poorer, and the community as a whole has a tremendous need for low-cost housing far from secular centers.
To make matters worse, Haredim prefer to live in low buildings no more than four or five stories in height, in order to avoid the need to travel in elevators on Shabbat.
Purchasing groups are considered as solutions for housing, but not as investments. In the secular world, purchasing groups were invented by people who wanted to live with their peers, but the system was perfected by property investors, who made it into a virtual production line. Investors realized they could buy apartments for less and sell them for more, so they started to group too. But not so in the Haredi world - they need roofs over their heads.
"Parents buy apartments for the kids, or couples buy for themselves. This isn't for investment," said Dov Vinkler, an investments and mortgages adviser. People view it as safer than buying by themselves.
The collapse of the construction company Heftsiba was traumatic for the Haredi community, and left deep scars, he said. Families had paid every penny they had to the company, but didn't make sure to get the proper securities - and when the company vanished, so did their money.
"The people are terrified of the builder going bankrupt," Vinkler said.
Heftsiba's demise was a year and a half ago, but the event caused a sea change in the way business is done in the Haredi housing sector, he said, which resulted in the formation of buying groups.
Like in the secular community, some of the Haredi buying groups are rich, some aren't. The richest are foreign residents buying apartments in Jerusalem, but generally the issue at stake is affordable housing, young families seeking apartments with three or four rooms on cheap land, such as in Pisgat Ze'ev or Modi'in Ilit.
Since buying groups typically target neighborhoods in formation, they're less of a solution for established families with lots of children, said Kess. Families like that need already established schools and synagogues, not adventures on unbroken ground.
