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Jacksonville Florida Real Estate Blog

Get latest news and real estate development in Jacksonville, Florida. A real estate blog by Will Vasana, Realtor.

January 22, 2006

New Home Trend and Tax Credits

A recent International Builders Show in Orlando, Florida indicates a strong demand for energy-efficient, customizable and hurricane-resistant homes from homeowners who can afford the best and who hope to set themselves apart from their neighbors. Home suppliers did showcase new products including leather-accented bathroom fixtures, a hearth-waterfall, a rotating bookcase that allows homeowners to conceal their televisions, a copper garage door and solar-powered blinds. Many of these new top-of-the-line products, both functional and decorative, come with a hefty price tag. Nevertheless, the Energy Policy Act of 2005, signed into law by President Bush on August 8, 2005 will provide tax credit for homeowners installing solar heating equipment in their homes. The tax credit is worth 30% of the cost of installing solar heating or photovoltaic equipment, up to a maximum tax credit of $2,000. The bulk of the tax benefits will go to energy-related businesses and commercial users of energy who purchase energy-efficient cars, trucks, and sport utility vehicles and who may qualify for two new credits, a $1,600 tax credit for energy-efficient vehicles and an additional "conservation credit" of up to $1,000. The credits won't be available until 2006. For more information, visit Federal Energy Regulatory Commission at www.fdrc.gov.

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Florida's Hurricane Fund Going Broke

Florida homeowners, already cash-strapped by expensive home insurance, now face the strong possibility of having to patch a hole in the state's hurricane catastrophe (CAT) fund. The senior officer of the Florida Hurricane Catastrophe Fund announced that insurers will take about $6.9 billion from the fund, leaving it empty and "starting off 2006 at zero." It is the first time the catastrophe fund's cash has dwindled this low since the fund was created more than a decade ago after Hurricane Andrew in 1992. The state fund provides affordable reinsurance coverage—insurance for insurance companies—to reduce the amount they pay in property damage claims after big storms. Insurance firms pay into the fund annually and in turn can take money out when a company's storm losses exceed $4.5 billion. Insurers didn't tap significant amounts from the fund until the 2004 storm season, allowing time to build a cash cushion. Insurance experts and observers have been expecting the fund to be drained since Hurricane Wilma hit Florida in October. Now the fund must be replenished, and one way or another Floridians will end up footing the bill. The fund's board can 1) make everyone with auto, home and business policies pay 6 percent interest of annual premiums, or $60 per $1,000 of premiums paid up to $15 billion in bonds sold for the fund, 2) make insurance companies pay more money into the fund this year, then pass the extra costs on to customers. Either action would require approval from the State Board of Administration, which is the governor, and the state's chief financial officer and attorney general.

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Asian Real Estate Boom Lures Foreign Buyers

With high rising home prices in the United States, many immigrants turn to their homelands for cheaper investments and a chance to ride the Asian boom. Investments by Asian-Americans are helping fuel hot real estate markets in China, India, Thailand, the Philippines and Vietnam. Foreign developers are accelerating that trend by marketing directly to eager buyers through mortgage brokers in the U.S. Once the domain of deep-pocket institutional investors, international real estate markets have opened to small investors as globalization provides opportunities for people and money. Experts say the potential for profits is huge, but so are the risks. For one, overseas investors can easily be duped or cheated in Asia's hot economies, and often have few remedies. For example, in China where all land is state-owned and leased to buyers, even if a wronged investor spends the time and money to take a developer to court and wins, collecting on the judgment is unlikely because most Chinese developers are small-scale operators. However, those risks don't stop investors, many of whom are attracted to Asia because of family ties.

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Expect More ARMs in 2006

Monthly payments on a substantial number of adjustable-rate mortgages (ARM) are projected to increase significantly in 2006—the first time since the ARM boom started—that the payments are expected to jump. The trend will give the nation’s lenders a plethora of refinancing opportunities, but it also means that lenders are likely to experience more than their share of credit-quality concerns. Financing experts say that most borrowers will be able to pay off loans they can no longer afford either by selling their homes or by refinancing to a fixed-rate mortgage or a new ARM.

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Buyer and Seller Survey

National Association of REALTORS released its annual survey of homebuyers and home sellers, noting that technology has transformed the way Americans buy homes, but not in the ways pundits first predicted. While 77 percent of consumers rely on the Internet for buying or selling help, 90 percent also still work with a real estate associate. In addition, the median home price for sellers who use an associate is 16 percent higher than a FSBO home sale.

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