In Cambridge, where median rents top $3,400 for a two-bedroom, residents regularly name affordable housing as their top concern on an annual survey. Amherst’s rental market is strained by a growing number of college students living off-campus. A family hoping to buy a house in Concord would need an annual income of $300,000 to afford the median list price of $1.5 million.
Local officials and advocates presented those facts and figures to state lawmakers Wednesday as they asked the Legislature to give them another tool in the fight against the continual squeeze of high and rising home prices: the ability to levy a new tax on certain high-value real estate sales and put those proceeds toward affordable housing.
“The reality is there is no silver bullet to solve our housing crisis,” Cambridge City Manager Yi-An Huang said. “We need more tools, more approaches and more action. And we need to be bold. The city of Cambridge is ready, but we need you. We need more tools to address this housing crisis, and those are things that only this legislative body can provide us.”
Lawmakers on the Revenue Committee heard testimony on bills that would let 10 individual communities — Concord, Arlington, Chatham, Provincetown, Amherst, Truro, Somerville, Cambridge, Wellfleet and Boston — impose their own local-level real-estate transfer taxes, along with a separate bill that would change state law to allow cities and towns to take that step without first seeking permission from the Legislature and governor.
Many of those municipalities have been trying to put a transfer tax in place for years. Concord Town Meeting voted to approve a transfer fee plan in both 2019 and 2023, and Somerville Mayor Katjana Ballantyne said she supported transfer fees when they first came before her as a city councilor in 2018.
“Currently, the median rent for a two-bedroom apartment in Somerville has soared to $3,000 a month. The median home sale is a staggering $941,000,” Ballantyne said. “That's a 17.6% increase in one year. These escalating housing costs have been highly destabilizing for many vulnerable members in our community. We are simply seeking to respond to the human crisis unfolding in our communities caused by the lack of affordable housing supply.”
The idea, however, has not gained traction with the Legislature’s Democratic leadership in recent years. It’s also opposed by some real estate industry groups, including the Greater Boston Real Estate Board.
In written testimony to the committee, the GBREB argued that transfer taxes would add new costs to home sales and represent an unstable revenue source.
“We remain focused on supporting legislation that focuses on enabling greater development of housing as the solution to affordability and housing concerns,” the group’s testimony said. “A new sales tax on homes and real [estate] simply limits the incentive to invest in new multifamily housing, slows the production of new supply and only exacerbates the challenge of housing affordability.”
The tax proposals vary by community. Under Boston’s home-rule petition, property sales for $2 million or less would be exempt. Above that threshold, the city would apply a 2% fee on the portion of the price above $2 million.
Mayor Michelle Wu said that, in 2021, the fee would have generated up to $100 million in revenue for housing affordability and production efforts. She says that, in that year, it would have applied to 700 transactions out of more than 10,000 property sales.
“Revenue raised through this fee will help us build supportive housing and ensure that our seniors can stay in their homes,” Wu said. “It will help build new homes for families who have been forced out by skyrocketing prices and make it possible for more first-time homebuyers to put down roots and raise their families here in Boston.”
Backers of transfer tax bills hope they’ll have an ally in Gov. Maura Healey. While former Gov. Charlie Baker didn’t support the idea, Healey campaigned on a platform that pledged to “empower communities to enact local policies that best address their own, unique housing challenges.”
Any next steps may not come for months. The Revenue Committee has until February to vote on the bills, and can opt to advance them, kill them or extend the deadline to decide.
