Greg Vasil

When Gov. Maura Healey delivered her inaugural address on Jan. 5, she did not hesitate to highlight one of the greatest challenges facing Massachusetts.  

“The cost of housing is also out of control because we simply don’t have enough of it,” Healey stated. “High housing costs are unacceptable for our people, our businesses, and the state’s future.” 

We could not agree more with our new governor. As the housing crisis enters its third year, inflation, high interest rates, and low inventory pose continued challenges for the housing market. For example, this past December, 3,838 single family homes were sold in Massachusetts: a 32 percent decline from the previous year. However, single family home costs hit a median price of $510,000, which is a record for December.  

Gov. Healey understands the serious, long-term threats the housing crisis poses to Massachusetts. The longer that prices remain high and inventory low, the more residents – from students, to seniors, to young families, and everyone in between – we risk losing because they can’t afford to live or stay here. This kind of flight poses dire risks to the state’s economic vitality and must be stopped.  

Fortunately, Gov. Healey’s proposed policies to address the housing crisis are a great start and her tone is spot on for those who understand the impact housing has on our economy. The governor said she will file legislation to create a secretary of housing within her first 100 days. She also said she plans to transform unused state-owned land and facilities into rental housing or homes within one year and construct more housing near transit hubs while reviewing possible avenues for zoning reform.  

As promising as Gov. Healey’s policy pledges were, they should not be the only ones her administration pursues in combating the housing crisis. For example, the governor should build on the 2022 economic development bonding bill proposed by Gov. Charlie Baker, which set aside $450 million in funding for housing production and related services. The bill included critical investments in below-market housing for first-time homebuyers and socially disadvantaged persons, as well as in workforce housing production.  

Steps like these, which get at the heart of the housing crisis by increasing inventory and driving down costs, are the most promising way forward for Massachusetts. Gov. Healey has so far indicated that she understands this to be the way forward, which is promising.  

Don’t Exacerbate the Housing Crisis 

However, some state and local officials have proposed other solutions to the housing crisis, which – as well-intentioned as they are – would only exacerbate the challenges facing Massachusetts.  

One such solution is rent control, rebranded by some as “rent stabilization.” Rent control would decrease housing costs for the limited number of residents lucky enough to acquire a rent-controlled apartment. However, rent control would actually lead to higher housing costs in the region, as the policy discourages production and limits inventory. Additionally, rent control places steep financial burdens on property owners, making it difficult for them to conduct routine property upkeep and maintenance.  

Rent control has already proven a fraught, failed policy in the areas that have implemented it. In 2021, for example, St. Paul, Minnesota passed one of the nation’s strictest rent control policies. But after less than a year, as developers halted projects and inventory outlook plummeted, the city dramatically altered its rent control policy, including far more exemptions around when controls go into effect, and how strong controls may be.  

Transfer Taxes, TOPA Not the Way 

Another well-intentioned policy that would only worsen the housing crisis are transfer taxes. Transfer taxes, which force buyers to pay an additional fee on top of their home purchase, are regressive and discriminatory, often forcing buyers to pay the same transfer tax rate, regardless of income level. The fact that they traditionally apply to the commercial real estate industry makes matters more difficult, as transfer taxes would discourage commercial real estate transactions: a troubling outcome when the future of downtown Boston remains so murky.  

Tenant opportunity to purchase, or TOPA, is a third housing policy that would exacerbate the housing crisis. While TOPA offers the admirable goal of allowing tenants to purchase property before said property is sold, TOPA ends up slowing the sale process so much that it discourages future investment in the community. The fees property owners traditionally face in association with TOPA also makes future developers less likely to build in the community.  

As Gov. Healey begins her tenure, she should not only embrace the pro-housing policies she has already outlined, like encouraging construction and minimizing red tape, but expand on them. Simultaneously, she should avoid implementing policies that, although well-intentioned, drive up costs and discourage production. Following these steps will put Gov. Healey on the right path to lead Massachusetts in overcoming the housing crisis. 

Greg Vasil is the CEO of the Greater Boston Real Estate Board, whose members specialize in the development, management and transactional aspects of residential and commercial real estate.