Nantucket as seen from the air. Gov. Maura Healey’s proposed local-option transfer tax would hit around 1 in 4 Greater Boston home sellers, but only half of their peers on Nantucket and Martha’s Vineyard. iStock photo
Million-dollar home sales just aren’t what they used to be in Greater Boston.
And that’s a major problem for Gov. Maura Healey as she forges ahead with her proposal for a local-option tax on home sales that cross the once rare, but now rather unremarkable, seven-figure mark.
I can already hear the so-called transfer fee advocates furiously typing angry emails chastising me for misrepresenting governor’s proposed new tax.
So, yes, like the proposed rent control referendum, Healey’s proposal would give cities and towns the option of taxing up to 2 percent of the value of home sales over $1 million dollars. And yes, the tax would apply only to the amount of the sale over seven figures, so that, theoretically, the fee on a home sale for, say $1.1 million, would be a relatively modest $2,000.
But given the strong lobbying for the measure, it seems pretty clear that any number of suburbs are waiting eagerly to adopt the new tax, which has been pitched as a new source of public money with which to build affordable housing.
And Healey seems to have committed to what amounts to an unforced political error by setting the bar for the new tax so low that it very well could ensnare middle-class sellers with rather ordinary homes whose value has skyrocketed in our grossly inflated housing market.
A Quarter of Boston Home Sales
The number of million-dollar home and condominium sales in Greater Boston more than quadrupled from 2012 to 2022, according to data from The Warren Group, publisher of Banker & Tradesman. That’s up from just 6 percent of all combined single-family and condo sales a decade ago.
In fact, they now account for more than a quarter of all sales inside Interstate 495, passing the 9,800 mark last year. When we zero in on Suffolk County, which is mainly Boston plus Winthrop, Chelsea and Revere, that number rises to more than 30 percent.
The pace of the price increases, in turn, has accelerated rapidly over the pandemic, doubling the number of million-dollar home and condo sales in the region.
Just as recently as 2019, the share of home and condo sales in the Boston area above $1 million stood at 13 percent.
The numbers here are new. That said, they simply confirm what even casual observers of the Boston area real estate market have long suspected, that prices, already unbearably high, have somehow reached a new level of insanity over the past three years.
Given that, one wonders how Healey’s team came up with the $1 million threshold for the transfer tax, which is typically pitched as a fee on luxury home sales.
After all, did anyone on Healey’s team run the numbers before deciding that $1 million sounded like a really big number most people wouldn’t care about?
Scott Van Voorhis
Well-Heeled Islands Escape Burden
Yet Healey seems more concerned about the impact the new tax will have on high-end home sales on Nantucket and Martha’s Vineyard – both bastions of wealthy progressive supporters – than on the impact the new tax could have on more middling homeowners and taxpayers in Boston’s suburbs .
In counties where the median home sale price is over $1 million, the governor’s transfer fee would kick in at the median price.
Only two counties in Massachusetts meet the criteria. And wouldn’t you know it, but they just happened to be the jurisdictions covering the two islands: Nantucket and Dukes counties.
That means that if Nantucket were to adopt the transfer fee, it would only apply to home sales of $2.5 million and up, according to The Warren Group’s 2023 year-to-date statistics for that island.
Setting the bar at $1 million seems an unforced political error on part of Healey and her team.
It makes Boston Mayor Michelle Wu’s proposal for a fee on home and condo sales over $2 million look reasonable by comparison, something the Boston Globe’s Shirley Leung also noted in a recent column.
The whole thing just looks like a huge muddle. And for a governor who has been crafting an image of a common-sense progressive, it’s not a good look.
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at[email protected].