New Jersey Estates/Weichert Realtors/ NJ Luxury Real Estate/ New Homes: January 2008

Intelligent Community Forum Announces Top Seven Intelligent Communities of the Year

Recent pronouncements indicate there may be good news on the horizon for builders who have been plagued by the subprime mortgage meltdown, slow sales and softening prices. Only history will tell if the espoused optimism for 2009 is correct. We do not, however, have to wait till then to see community success today. The Intelligent Community Forum announced last month its list of the Top Seven Intelligent Communities of the Year, each a model for economic development in the 21st Century, at PTC'08 in Honolulu, Hawaii. Each provide broadband technologies and secure local government support as the engines for community growth.

"Gaining a place among the Top Seven is a major achievement as well as a step toward even greater recognition for communities working to create prosperity and social inclusion," the ICF said. "For the first time, the Top Seven included three American communities, plus three from the rest of the world that were named to the list a second time."

Listed in alphabetical order, the 2008 Top Seven are:

1. Dundee, Scotland, United Kingdom. This former industrial center known for "jute, jam and journalism" has transformed itself through intensive government-academic-business collaboration and broadband deployment into a UK center for life sciences and digital media. An innovative smart card for citizens was so successful that the Scottish Government asked Dundee to run its national program. With rising net job growth and business starts, Dundee has created a Digital Observatory to track its future progress as an Intelligent Community. (Top Seven 2007)

2. Fredericton, New Brunswick, Canada. This community of 50,000 was a broadband "have not" until the City Council led an effort to aggregate public-sector, university and business demand and created e-Novations, its own fiber carrier, then launched the Fred-eZone wireless network offering free connectivity across the city. Today, Fredericton contains 70 percent of the province's knowledge-based businesses and is using ICT to substantially reduce its carbon footprint.

3. Gangnam District, Seoul, South Korea. With only 2.5 percent of Seoul's population, this district produces 25 percent of the city's economic activity, and has invested its wealth in the next generation of e-government. Since 1995, a relentless digital drive has reduced the cost of government while delivering online services, education, quality of life programs and e-democracy to citizens. Over 70 percent of citizens have received ICT training through schools, community centers and a TV GOV program. (Top Seven 2007)

4. Northeast Ohio, USA. The communities of this region are rising from the ashes of deindustrialization to recreate the entrepreneurial business, political and social culture that produced its first wave of prosperity. A successful fiber network deployment by OneCommunity has been leveraged by government and nonprofits to jumpstart new investment, improve healthcare delivery, bring the best in culture and education to urban schools, and engage tens of thousands of area leaders in collaboration over regional economic development.

5. Tallinn, Estonia. A suggestion by Estonia's president in 1995 that schools be connected to the Internet led to an ICT revolution that has linked 100 percent of Tallinn's secondary schools to the Web and established over 600 public access points. More than 100,000 adults have received ICT training, while e-government programs have produced one of the most advanced smart card systems in Europe and a middleware program that slashes the costs of e-government. It was not until 2004 that the last Russian troops left the country, yet today, Tallinn receives 77 percent of all foreign direct investment into Estonia and seven out of ten in its workforce are in the service sector. (Top Seven 2007)

6. Westchester County, New York, USA. This suburb of New York City was largely ignored by broadband carriers until it amassed demand from public agencies and built a multi-gigabit fiber network that now serves over 3,500 companies. Determined to maintain the quality of life that is its most compelling advantage, the county has invested in promoting business growth, improving the skills of its workforce and fighting digital exclusion in a community that has seen new immigrants become 35 percent of its population.

7. Winston-Salem, North Carolina, USA. Powerful government-business-academic collaboration led by Wake Forest University permitted this former "tobacco capital" to build a fiber network that spurred demand and led to an 88 percent broadband penetration rate. The partners have used this digital foundation to develop free computer labs across the region, create an e-government portal that is number three in the nation, and build a sustainable ICT skills training program. The city and county now count 37,000 biotech employees as residents and will fund a program to put Pcs and broadband connections into the homes of low-income students.

"No Intelligent Community we have studied has succeeded without strong leadership. Effective leaders identify challenges, set priorities, communicate a compelling vision and foster a sense of urgency about achieving it. They establish a collaborative environment that encourages risk-taking and creates win-win relationships with partners in government, businesses and institutions," added ICF Chairman, John G. Jung. "This group of seven demonstrates dramatically how broadband technology, enlightened public policy and the power of culture can transform government, businesses and citizens. Broadband is the next essential utility, as vital to prosperity as clean water and good roads. These communities offer us inspiring models of the best ways to put it to work."

In related news, Forbes.com recently announced its "blue chip" neighborhoods, those communities where properties have held on to and increased in value over the last 17 years. More specifically, it listed the markets in the country's 15 largest metros which show the greatest total historical appreciation since 1990. They are: New York, Chicago, Dallas, Philadelphia, San Francisco, Los Angeles, Houston, Miami, Phoenix, Washington, D.C., Atlanta, Detroit, Boston, Seattle, and Minneapolis. For a more detailed description of each market, go to Forbes.com.

Knowing where the hot markets are, and learning why real estate consumers gather there, can be the difference between success and future in the dynamic new home building industry. These two organizations offer some interesting insights into real estate consumer needs and behaviors builders can learn from and perhaps adjust to as we move toward a more hopeful 2009.

[Note: ICF (www.intelligentcommunity.org) is a nonprofit think tank that conducts research, hosts events, offers tours of Intelligent Communities, publishes newsletters and presents awards to promote best practices in economic and social development.]


Written by Peter L. Mosca
January 28, 2008 

Realty Viewpoint: Conforming Loan Reform on the Table For Months

If consumers would like some positive proof of what the National Association of Realtors does to promote homeownership, the recent agreement between the White House and House leaders to include higher conforming loan limits in an economic stimulus package is a perfect example.

The NAR has been lobbying since 2005 to raise the limits on FHA loans to $625,000 because high-cost areas such as California and Florida have many areas where the median home is out of conforming range. Relief on the coasts could be enough to calm the markets across the nation.

Any loan that doesn't conform to government guarantee limits costs more than a conforming loan, so when the subprime crisis came to a head last summer, all non-conforming loans were curtailed by lenders, including "jumbo" loans. Jumbo loans serve consumers borrowing more than $417,000 to buy a home.

The NAR through its public relations and its lobbyists have importuned the government with figures that suggest that a higher loan limit would accomplish a number of objectives:

• lower interest payments for consumers who get new "GSE jumbo" loans

   

• reduce the supply of homes on the market by one to one-and-one-half months

   

• strengthen home prices by two to three percentage points

   

• reduce foreclosures by 140,000 to 210,000

   

• stimulate an additional 348,000 home sales.

   

• increase economic activity by $42 billion.

The reason this will make such a difference is lending is clogged right now. Banks don't want to loan money and not be able to get more money, so having higher limits on FHA loans means that government-sponsored enterprises like Fannie Mae and Freddie Mac will guarantee those loans. That means the loans can be packaged into securities for investors, and investors will buy them because most of the risk has been taken out of the equation.

But the new limits aren't a done deal yet. The Bush administration would like to see higher loan limits coupled with closer oversight of Fannie Mae and Freddie Mac.

Those naughty siblings are still recovering from years of accounting fraud and upper management shuffling, so the government wants to make sure the GSEs can handle even more responsibility.

The House has passed a GSE reform bill, but the Senate hasn't and that could cause significant delays. Lawmakers promise quick action, but homeowners and buyers are still waiting.

Regardless of what happens or when, we wanted you to know that Realtors are spending their money trying to help you buy homes.


Written by Blanche Evans
January 28, 2008 

Washington Report: Compromise and Teamwork in the Capitol

Maybe it's a side effect of having to deal with rough economic times, but there's something unusual going on right now in Washington: Republicans and Democrats, Congress and the White House, seem to be actually working together to solve housing and broader economic problems -- without a lot of the usual partisan backbiting.

The cooperative effort on the multi-billion-dollar economic stimulus package -- with its tax rebates and mortgage relief for home owners sliding toward foreclosure -- is the most public example of cooperation.

But behind the scenes there have been other hints that maybe this election-bound Congress is ready to move ahead on legislation that should ultimately be positive for real estate.

For instance, though many people in the housing and mortgage industries are skeptical that Democrats and Republicans on Capitol Hill will produce a compromise legislative package to modernize the Federal Housing Administration -- raising maximum loans limits in high cost areas and streamlining the mortgage insurance programs -- there are indications that Senate and House leaders are eager to compromise and resolve differences quickly enough to put a package on President Bush's desk in the coming month.

Things could still fall apart and that timetable could slip, but bipartisan reform of FHA is now something the real estate industry can pretty much bank on.

The festering mess in the subprime market is also softening partisan opposition to broadscale improvements to the mortgage system itself. The House passed a bipartisan bill last year that would force lenders and brokers to ensure that future home buyers and borrowers are only put into loan programs that are appropriate to their financial situations, and that they understand.

The Senate Banking Committee, whose chairman, Sen. Chris Dodd, is now back on the job -- having abandoned his quest for the Democratic nomination for President -- is expected to hold hearings on a roughly similar bill in the near future. Meanwhile, Sen. Dodd is pushing for creation of a new $20 billion federal corporation to buy up defaulting loans of home owners, and replace them on a massive scale with more affordable ones.

Who knows? This Congress might actually get some of these things done!


Written by Kenneth R. Harney
January 28, 2008 

American Dream Turned Nightmare

The housing boom drew a lot of speculators and carpet baggers -- freeloaders who wanted to make a quick buck during the gold rush and cared little or nothing about the long-term effects on the housing market. They took none of the risk, gathered all of the profits, and scampered out of town just before the sheriff showed up.

They partied and left the American homeowner to pick up the tab.

President Bush has said that a bailout is out of the question, noting, "A federal bailout of lenders would only encourage a recurrence of the problem." This is certainly true. Bailing out the lenders would simply lay the burden on taxpayers and provide the carpet baggers with another opportunity to pillage.

The President did reach out to some distressed homeowners -- those with good credit histories who could probably pull themselves out of their current crises with a little help from the federal government. The FHA (Federal Housing Authority) will be given more flexibility to assist homeowners who have subprime mortgages. Homeowners may also be spared having to pay additional taxes in the event that the lender forgives a portion of their debt. Perhaps this will encourage lenders to work out reasonable solutions with homeowners.

But what about all the other consumers -- hard-working American families who are too deep in debt to be saved? What about the children who are going to be uprooted from their neighborhoods and the school districts where all their friends go? Government officials, lenders, and people who have not been victimized by the shoddy lending practices of the last decade are quick to judge. After all, they are not the ones paying the price. The people who are suffering are the ones who usually suffer in these situations -- consumers. These are the people who were sold ARMs (adjustable-rate mortgages) that ended up costing an arm and a leg. They were told that they could refinance before the rates went up or could build higher credit scores by making their payments on time and then refinance with a low interest rate mortgage later.

Then, the bottom dropped out of the housing market, making it nearly impossible for these hard-hit homeowners to refinance. Some of these loans even came with stiff prepayment penalties to further discourage people from refinancing. These folks were led down this path simply because they trusted an "expert" in a fancy suit with a silver tongue who failed to warn them of the looming trouble and the risk they were taking. Where are these smooth talkers now? Probably out of work and seeking more fertile fields to ply their trade. They turned the American Dream of Homeownership into a nightmare, but they certainly aren't the ones having to wake up to it.

Instead of letting them off the hook, they should be forced to take ownership of the problem they created. Instead of waiting around to see whether the federal government is going to bail them out, they should be actively pursuing those they led astray and offering them real solutions that can help these distressed homeowners regain their financial footing.


Written by Ralph Roberts
January 24, 2008