Understanding the proposed transfer fee
A few more minutes of fame
I wrote a speech that wasn’t delivered this June. It was prepared for the GBIO rally focused on affordable housing. I wrote my text and was ready. The Thursday before, I was bumped because Mayor Wu decided to attend and endorse the real estate transfer free. She took time that several less important speakers – like me – would have used. So, I was all written-out and nowhere to go.
One of my main points is that the Greater Boston Association of Realtors®, Massachusetts Association of Realtors®, and the National Association of Realtors® do not speak for me in regard to affordable housing. They take my dues and use them to fund action I directly oppose. Therefore, I am… I don’t know what word to use… chagrined? embarrassed? feeling misrepresented or invisible? mad? when coverage of the rally includes a blanket statement that Realtors® oppose affordable housing initiatives.
About a month later, I was approached to work on an op-ed with colleague Brian Sullivan to be published in the Boston Business Journal. That published last week.
About that transfer fee
The wheels of Massachusetts’ government grind slowly.
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.
This week, I got daily email blasts regarding a legislative action. The owner-centered real estate lobby* 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.
*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.”
What’s happening now with the transfer fee?
The student rush-in time (July and August) is coming to a close in the next week or two. This is the hot season for rentals in our area.
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.
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.