New taxes on real estate sales were a hot topic on Beacon Hill last week, but unfortunately, both sides have it wrong, to one degree or another. 

Advocates, municipal leaders and, yes, some real estate industry figures from dozens of towns are clamoring for the legislature to give towns and cities the option of enacting a local transfer tax to fund affordable housing. Current resources are not enough, they argue, and more is needed. 

The real estate lobby, this time in the form of a GBREB-sponsored investigation into how towns and cities spend money raised by local Community Preservation Act property tax surcharges, say most municipalities have barely used their existing CPA authority to fund housing construction and affordable housing preservation. And a new sales tax would just make the housing affordability problem worse, they say.  

Their arguments also carry an undercurrent that calls for new taxes are at least somewhat performative when they come from towns like Nantucket or the Boston’s more leafy, liberal and loaded suburbs.  

And they’re right: No amount of new housing money will strip back frankly ridiculous zoning restrictions that make the process of developing even a small affordable housing project a costly, bitterly divisive, years-long slog where nearly every detail of a proposed building is litigated by local busybodies in the name of a nebulous “neighborhood character.”  

So long as most towns’ zoning doesn’t allow for all single-family lots within a half-mile of a business node or train station to be redeveloped with at least 15 homes per acre, any new tax money for affordable housing will be throwing good money after bad. 

Local-option transfer taxes have two further problems. Most obviously, unless they’re designed correctly they will increase land-acquisition costs for new housing developments – just the opposite of what’s needed. And a patchwork of local housing trust funds could cost affordable developers just as much to apply to as the money those funds can give out. 

But transfer taxes are also fundamentally unfair. Every homeowner in Massachusetts is benefiting from the housing shortage as their property values tick up and everyday people unlucky enough to be stuck renting get further ground down. And more than a few of those homeowners are actively or passively harming efforts to fix that. They need to pay society back for the harms they are causing, and a small, regional property tax to fund affordable housing would be a good solution. 

The real estate industry also misses critical things. Most suburbs don’t have the same pool of rich donors willing to fund historic preservation projects that, like it or not, many residents want. Parks are another area that can get short shrift in the course of normal, penny-pinching municipal budgeting. 

Second, we fundamentally need more money in the system to fund affordable housing construction. The real estate industry’s own experts generally agree that home prices are unlikely to fall much, if at all, this year after their meteoric rise since 2020. And high construction labor and materials costs mean it’s basically impossible to build new, lower-priced housing in many places without subsidies. 

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