Mass. Gov. Maura Healey and Boston Mayor Michelle Wu are both pushing to bring down housing costs, an issue Healey described as one of the most pressing issues in the state right now.
Massachusetts is known for being one of the most expensive states in the nation to live in. With the cost of housing continuing to skyrocket, two Bay State leaders are taking a stand.
Healey wasn't shy to say Wednesday night during her State of the Commonwealth address that the cost of living in Massachusetts is still too high.
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The Healey administration's plan to supercharge housing production with billions of dollars of investment won some degree of praise from almost every corner of the state Thursday, but influential voices are at odds over some of the more dramatic policy changes Gov. Maura Healey offered.
Hundreds of people crowded into the State House's largest hearing room to offer feedback on the five-year, $4.1 billion housing bond bill, representing a cross-section of affordable and public housing activists, real estate developers, and residents who themselves continue to withstand the crushing pressure of high costs and low supply.
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While most speakers at a Housing Committee hearing praised the proposal for its large scope and agreed the state has a moral and economic imperative to make more housing available, the divergent reviews for measures like local-option real estate transfer taxes forecast that lawmakers have some tricky decisions ahead that are likely to please some interest groups and rile others.
Allison Drescher, president of the Small Property Owners Association, told lawmakers her group believes a part of the bill allowing any city or town to impose additional fees on high-value real estate transactions "runs counter to the bill's broader goal of increasing the supply of housing for the simple reason that this will further constrain the housing market in a time of adverse economic conditions."
The 13,000-plus-member Greater Boston Real Estate Board said it, too, "strongly oppose[s]" the proposed transfer fees and inclusionary zoning measures despite its support for much of the remainder of the bill.
"Every facet of our membership from multifamily residential to commercial and single-family homes would be adversely impacted by the proposed sales tax on real estate. The real estate market is highly sensitive to economic downturns and is an unstable source of revenue," the group wrote in its testimony. "This tax, which also captures the commercial office sector, adds new burden to owners. Office vacancies are at an all-time high in Boston and across the region. The cost of debt/borrowing remains high, and this is crippling the investment sales market. Unlike a mortgage, a tax cannot be financed and will simply be passed on to the tenant or buyer."
Those in favor of the transfer tax language argued that instead of stifling production, it would instead unlock millions of dollars in new funding that could be put toward housing affordability initiatives. They also said other factors like high interest rates are more likely to prevent construction or rehabilitation of housing units than additional local fees.
Boston Mayor Michelle Wu, long a supporter of local real estate transfer taxes, said winning state permission to enact a version the city has proposed -- which would likely apply to even fewer transactions than the language in Healey's bill -- would "double our budget for affordable housing annually."
"These funds would go toward downpayment and mortgage assistance, the acquisition and conversion of market-rate housing to income-restricted housing, and the production and preservation of deed-restricted rental housing for low- and moderate-income residents," Wu said.
The mayor and her housing deputies referenced past city studies that found their proposed transfer fee would not depress new housing production.
A handful of communities, and some lawmakers, have been pushing for years to win the state's permission to tax high-dollar real estate sales and put the money toward affordable housing investments. But top Democrats who control the House and Senate have not shown much interest in the idea, quietly siding with property and real estate market interests.
Healey's support could press legislative leaders into backing the measure, or it could set up a high-profile disagreement on a part of a bill that the governor dubbed her "highest priority."
Sen. Julian Cyr, a Truro Democrat, said Nantucket became the first community 10 years ago to pursue state approval for a fee on pricey real estate sales. He described the menu of policy changes and investments Healey proposed as "essential."
"We feel so listened to in a way that I think we have yet to feel on this," he said during Thursday's hearing. "I just cannot convey from our perspective the urgency of this crisis. I've experienced it sort of personally -- my current long-term housing plan is, like, I need to find a husband who makes quite a bit of money, right? Because that's what you need. To afford the median home price in Truro, you know what you've got to make as a household? $400,000 a year."
Although some of the most influential business and industry groups voiced concern about the transfer fee, it did not draw universal criticism from the construction and real estate realms. Candace daRosa, a real estate sales agent on Martha's Vineyard, told the committee the Greater Boston Real Estate Board's opposition "does not represent the position of the Realtors, brokers or agents I know and work with on the island." Housing Committee Co-chair Sen. Lydia Edwards said during the hearing that "titans of development industry such as HYM" and employers like Massachusetts General Hospital support the policy, too.
The legislation Healey filed in October combines a major increase in bonding to fund housing development and preservation with more than two dozen policy changes, including language allowing accessory dwelling units by right in single-family zoning districts across the state and a system to seal tenants' eviction records years after no-fault evictions.
Healey joined Lt. Gov. Kim Driscoll and Housing Secretary Ed Augustus at Thursday's hearing, where they said the measure would support creation or preservation of 70,000 housing units.
"We hear from residents everywhere we go, and I know that you do as well -- families who are priced out of homeownership, working people who cannot find affordable apartments anywhere near their jobs, seniors struggling to stay in their homes, recent graduates here in Massachusetts looking to leave our great state, businesses wanting to expand, wanting to grow here, wanting to operate here, but unable to land the talent to recruit people here because housing costs are too high," Healey said. "I want people staying in Massachusetts, I want people thriving in Massachusetts. That's what I want, but housing and the lack of affordable housing is getting in our way."
The governor made solving the housing crisis a major platform in her winning campaign in 2022, but progress on solutions has been slow.
Home sales across Massachusetts sank to a 12-year low in 2023, Healey's first year in office. The Warren Group reported Tuesday that record high prices and an insufficient inventory helped push home sales down by nearly 22.5 percent in 2023, compared to 2022.
The median sale price for a single-family home in Massachusetts last year was $570,000, up about 3.6 percent over 2022. In December, there were 3,150 single-family home sales in Massachusetts, the fewest for any December since 2008. The median single-family home sale price increased 5.9 percent in December to $540,000, a new all-time high for the month.
Some activists pressed lawmakers to expand the scope of the bill even further and include language that would allow cities and towns to adopt rent control -- a policy voters banned statewide in 1994 -- or limit foreclosures.
"Profit-seeking corporate investors are increasingly buying homes and hiking rents astronomically, raising the price of housing for everyone else," said Homes for All Mass. Executive Director Carolyn Chou. "The evictions and foreclosures caused by the housing crisis cause enormous disruption to people's lives, and many families never recover. Rent control and foreclosure protection are the immediate lifelines we need to protect people now while we pursue long-term reforms that will take decades to impact housing costs. While the Governor's bond bill provides long-term investment in affordable housing, we need to keep our communities housed today.”
Another point of division in the legislation is a proposal to set a simple majority voting threshold at the local level, rather than a two-thirds majority, for inclusionary zoning ordinances and bylaws.
Massachusetts Competitive Partnership President Jay Ash, who previously served as Gov. Charlie Baker's housing and economic development secretary, told lawmakers he thinks inclusionary zoning has "a negative impact on production."
"If our belief is that production is at an all-time low -- I think we all agree on that -- then we should be doing everything we can to encourage production, and it's my experience as an economic development professional that when you add an additional responsibility [like] inclusionary zoning, you drop the the number of developers who can pencil out in secondary and tertiary areas, and that isn't always appreciated at the local level," Ash said.
Edwards, a Boston Democrat who at one point asked for "receipts that show" the purported negative impacts of the transfer tax on production, suggested that she and some business leaders have "different approaches to housing."
"For some people, it is just build and get out of our way, and let there be the units and build as many units as possible, and then it'll trickle in ways down to ensure that there's enough affordable housing, that there's enough housing for people regardless of their backgrounds," she said. "I believe that the goals of this bill -- it is not just a production bill, it is a systemic reform of our housing in the state bill. It is not siloed in just build[ing] more units."
The hearing began shortly after 11 a.m. and new speakers were still being called to testify as 5 o'clock approached.
