Gauges of strength

Last week the Senate Finance Committee reportedly passed a two-year retroactive extension of tax relief for homeowners who have had mortgage debt forgiven by a financial institution as part of a short sale or loan modification.

While this is only one committee and the legislation must still be passed by the full Senate and by the House of Representatives as well, this is a key step. The forgiveness of debt by mortgage providers is set to expire at the end of last year unless the full Senate and House approve the extension. Households would then have had to report the “phantom” income or amount of debt forgiven on their tax returns next year.

According to analysts, there is a “good chance” an extension will be given.

Approximately 350,000 households could be impacted by the tax if relief is not extended. This is the number of households who sold their homes last year as a short sale. An estimated 300,000 to 350,000 homes are to be short sales this year.

The bill passed by the Senate Finance Committee also extends the 15-year cost recovery for qualified leasehold improvements and a provision that lets qualified real property be expensed. The legislation also extends the deduction for energy-efficient commercial buildings.

Last week the Labor Department reported that across the nation approximately 192,000 jobs were created in March. The number of jobs for January and February was revised upward by 37,000 jobs. The unemployment rate increased from 6.6 % to 6.7 %. The labor force participation rate, which measures the percentage of working Americans who have a job or are looking for employment, ticked up from 63% to 63.2%.

In comparison, Connecticut’s unemployment rate decreased from 7.2% in January to 7% in February. This is the seventh straight monthly decline in Connecticut’s unemployment rate since July 2013. Connecticut recovered 800 non-farm jobs in February and has added 10,300 jobs over the year.

Connecticut has recaptured approximately 60,000 positions, or about 50% of the 119,100 seasonally adjusted total non-farm jobs that were lost in the state between March 2008 and February 2010. Connecticut’s job recovery is four years old and is averaging approximately 1,240 jobs per month since February 2010. The private sector has recouped 71,800 of today’s 112,000 private jobs lost during the economic downturn, but the state needs an additional 59,600 jobs to start a true non-farm employment expansion, according to the Connecticut Department of Labor.

The Federal Reserve considers unemployment in its bond purchasing intended to bolster the housing market. The Fed is now purchasing $30 billion in treasuries and $25 billion in mortgage bonds. This is important because home loans are based upon these types of bonds.

This is down from the initial $85 billion per month that the Fed had been purchasing since the economic downturn. The Fed continues to monitor unemployment and other gauges of the economy’s strength in tempering its bond purchases.

In Connecticut, we need to create more jobs and attract more businesses. This will further strengthen not only the real estate market but other sectors of our economy.


Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]

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