This summer, I have been out front on efforts that aid affordable housing in metro Boston.
I was approached to work on an op-ed with colleague Brian Sullivan that was published at the end of August in the Boston Business Journal. It was about a proposed transfer fee in Massachusetts.
A quick timeline on affordable housing:
The wheels of Massachusetts’ government grind slowly. I have been following the slow grind for the last four years on my personal blog.
April 2022: I wrote about the politics that led to the end of rent control in 1997 and the failed effort to establish a transfer fee in Cambridge shortly thereafter. That April, bills were moving through the Massachusetts legislature that looked promising. I was looking forward to some action on affordable housing; I am still looking forward. Research was ordered in October 2022, and the bills have been collecting dust ever since.
Those bills, H.1377 and S.868, would give all cities and towns the option to impose a transfer fee between 0.5% and 2%. There are details about minimum price point and such. As well, towns will be able to modify their transfer fee programs, and their exclusions, within the limits of the state law.
These bills would leave it up to every town and city to choose to participate or not. It is a state-wide law allowing each town or city to choose to create a fee within the state-wide parameters. In case you hear the term, it is called “enabling legislation.” With this, any town or city government can develop a fee to suit their municipality.
Without this bill, each town and city must ask for permission from the legislature to impose a transfer fee. That request is called a “home rule petition.” Several towns and cities have filed home rule petitions regarding the creation of a transfer fee on high-end real estate sales.
December 2019: I started getting news about possible transfer fees in December 2019. At that time, I wrote:
“Transfer taxes are a one-time fee that accompanies the registration of a deed of sale. It is a way to generate revenue for a municipality through real property sales. People who buy and sell a house a few times in their life will pay it a few times in their lives. These fees offset other ways that a municipality gets revenue, like taxing residential and business property every year. The general public benefits from the shifting of the cost of affordable housing onto people who are doing a regular business in real estate development.”
That week in 2019, I got daily email blasts regarding a legislative action from that owner-centered real estate lobby* that wants their members to fight any fees attached to sales of properties. Boston wants to add a transfer fee to sales in the city in order to support the building of affordable housing.
The primary argument is that it will hurt sales prices for real estate; that has not been proven. Their secondary argument is that Boston has other measures to combat the affordability crisis. They fail to mention that they also sent email blasts to their membership urging them to oppose those measures as well – and claimed it would hurt sales in Boston.
Summary: since 2019, things have not gotten any better for renters or purchasers. I would say that they are somewhat worse.
Affordable housing is not just a good idea. It is essential to a functioning economy. Eastern Massachusetts’ economy runs on hospitals, colleges, and businesses who employ tech workers. There is a chronic problem with recruiting nurses and medical professionals because of the cost of housing here. There are multiple chronic problems with creating housing for undergraduates, recent grads, and grad students. If there is not enough affordable housing for the emerging technically trained workers, they will decamp to cities that welcome them.
Overall, there are still more buyers than sellers, keeping bidding wars alive. The sales season is usually in the spring and fall, but so far, this year is fairly slow in regard to the number of sales. Prices are still going up here due to limited housing supply. There are still properties being improved and sold – flipped – as a good percentage of the properties that are for sale.
What’s happening now with the transfer fee?
Next week, there will be a hearing at the State House about the enabling legislation. I will be on a panel with other professionals to discuss this important topic.
*As you know I belong to that big real estate guild, R– ®, but I hold my primary allegiance to consumer-oriented organizations like the National Association of Exclusive Buyer’s Agents and the Massachusetts Association of Buyer’s Agents.
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