In 1920, a group of pioneers from the Second Aliya who came from Eastern and Central Europe, together with a small group of sabras, created Agudat Bonei Bayit (the association of home builders). They acquired a plot of 280 dunams from the Greek Orthodox Church, on which the 148 members of the association wanted to build a neighborhood of small houses surrounded by gardens. The construction began in 1922, designed by architect Richard Kaufmann. It was planned as a neighborhood divided in the middle by a large avenue with gardens alongside, with little paths and alleys converging from it leading to the houses. One of the rules was that the plots would be purchased with the members' personal savings, with no official funding, and that families would be given the right to buy larger plots, to use them as local farms to grow fruits and vegetables. This turned the new neighborhood into a kind of an independent entity within the city. Another rule was that since all the members of the association were secular, no synagogue would be constructed in the neighborhood. It took a few decades until the Central Synagogue of Beit Hakerem was erected, soon after the creation of the state. The appeal of the new neighborhood was great. Within two years, 29 houses were built and inhabited, and by 1927 there were 67. The work was conducted by the Palestine Office for Public Works, which soon became the well-known Solel Boneh construction company. It was, in fact, its first project. Even the poet Chaim Nachman Bialik was interested and bought a plot. In the end, he just planted a few trees. The area is known today as Bialik Woods, situated at the corner of Bialik and Hameyasdim streets. At about the same time (the early 1920s), a seminar for teachers was built in the middle of the neighborhood. Today it is the David Yellin College for Education, which was one of the largest and tallest buildings in the neighborhood until the 1970s. Since the new neighborhood was quite separate from the rest of the city and surrounded in those times (before 1948) by the Arab villages of Ein Karem and Deir Yassin, the need for some public transportation became crucial. The cooperative Hamekasher with small public buses was created to solve the problem, and soon began to serve additional neighborhoods. Later on Hamekasher, which was considered an excellent means of public transportation, developed and ultimately became one of the constituents of Egged. Over the years, public transportation has become one of the toughest problems of Beit Hakerem and its residents.

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