Amy Wallick

As we enter the second half of this two-year state legislative session, winding towards the home stretch this summer, real estate and housing policy continues to be at the forefront with the governor’s recently filed housing bond bill.

First, however, it’s important to take a look back at what elected officials accomplished in the first half of this session. 2023 was a banner year for housing policy by any metric.

The fiscal year 2024 budget was enacted including significant year-over-year funding increases – again – for many housing assistance line items, far outpacing budget averages. The budget also included reauthorization of the brownfield redevelopment tax credit and quarry testing to prevent crumbling concrete foundations.

The former is a key development tool in certain areas and the latter is a significant issue facing homeowners in the central part of the state. Quarry testing assures that homes can no longer be built using tainted concrete foundation aggregate. Finally, the historic tax relief package increased tax credits for renters, landlords providing below market rents, homeowners facing lead paint abatement or septic system repair or replacement challenges, and developers looking to create housing in gateway cities.

Bill Adds Valuable Reforms

While none of those items alone, or collectively, is a panacea to Massachusetts’ housing challenges, they are further tools in the toolbox that homeowners, developers and state and local officials can use to continue progress, especially when coupled with the zoning reforms required by the MBTA Communities law. That innovative law requires municipalities to allow for slightly denser development around transit.

Following up on the MBTA Communities law is necessary but also no easy task. The housing bond bill, or “The Affordable Homes Act,” created through months of planning under the direction of the Healey administration’s new Executive Office of Housing and Livable Communities, however, is a solid start.

The bill includes $4.1 billion in bonding authorizations for housing. That’s a bold number, over $800 million per year, more than twice the 2018 housing bond bill, and far outpacing the 10 percent and 29 percent respective increases of the last two iterations of this five-year process.

The bond bill also includes several policy provisions, which can be a pathway to build on the historic Housing Choice and MBTA Communities reforms of 2021. One likely to have the biggest effect is a proposed zoning change allowing accessory dwellings units by-right in single-family residential zones. It’s a good policy that balances increasing consumer access to accessory dwelling units for much needed infill and family housing with each municipality’s ability to tailor the policy for its needs.

Tax Would Harm Homebuyers

The bill, however, also contains a tax proposal that would make it more expensive to buy or sell a home in Massachusetts.

Gov. Maura Healey and the state legislature recently enacted the first tax relief law of the last two decades in order to help reverse the recent population declines and remain competitive with other states. To build on those efforts, we need policies designed to reduce the cost of housing, not add new taxes to it. The result of implementing transfer taxes is more expensive homes that are further out of reach for many Massachusetts residents with 1,727 people priced out for each $1,000 increase in price.

Proponents of the tax note that it would hit less than 14 percent of residential sales statewide and point to its million-dollar threshold as signifying luxury homes only. However, the real estate market is not siloed.

Increasing the price of expensive homes will increase competition (and thus prices) for more moderately priced homes, especially in the Greater Boston region. It will also increase the housing market stagnation we’ve experienced in recent years, deterring growing families from moving into larger homes or empty nesters from downsizing into smaller units. These types of moves free up much needed inventory and are critical to a healthy real estate market.

Tax Would Compound Office Problems

The tax would also hit commercial properties, which have faced significant value declines since the pandemic. According to research by commercial brokerage Newmark, citywide office valuations are down 20 to 30 percent, with smaller and older buildings, such as the one at issue in the article, facing losses closer to 50 percent.

Adding a tax to these losses will further decrease the value of already struggling commercial properties and increase risk for developers and property owners, all leading to less development, fewer new homes, and ultimately shrinking tax revenues.

There are additional policies that would help create more housing and avoid the harms of transfer taxes. For example, creating more zones for by-right multifamily housing, further increasing density around transit nodes statewide or creating state oversight of special permit and variance decisions could all be helpful next steps.

In sum, there’s plenty to like about the governor’s Affordable Homes Act and we look forward to working with her administration and the legislature to assure that it continues recent progress in addressing the state’s housing crisis.

Amy Wallick is the 2024 president of the Massachusetts Association of Realtors and a Beverly-based Realtor with Lamacchia Realty.