Assuring housing needs are met is our responsibility

  • jacoblund

Published: 3/31/2021 2:41:11 PM

I attended the first “Housing Is A Human Right Forum hosted by Greening Greenfield and Franklin County Continuing the Political Revolution (FCCPR) this past weekend. Although The Recorder covered it, a few legislative proposals were discussed that are in the public interest. The public needs to have an honest discussion about how to deal with our housing needs, especially when there isn’t enough of it and obstacles are in the way of creating more of it. Although the real estate market is doing well, it is also leaving too many of our neighbors behind. There aren’t enough housing options for people starting out. It is one of the most important issues our democracy faces today.

State Sen. Jo Comerford mentioned some proposals that would have a direct impact on current homeowners when selling their house to help fund affordable housing, which isn’t just a home one can afford. “Affordable housing” is a legal term under Chapter 40B. It’s subsidized. Those who buy those homes need to meet certain income requirements and agree to take ownership with deed restrictions. An owner of a Chapter 40B home doesn’t have the freedom to refinance, make improvements, or sell without permission. It’s a good program, but it’s not for everyone.

One proposal to help fund affordable housing is doubling the fee for tax stamps, from $4.56 per $1,000 to $9.12 per $1,000 of the sale price. Put another way, the tax stamp fee would rise from $1,368 to $2,736 on a $300,000 home. The other proposal mentioned by Comerford was giving cities and towns the option to tax .5% to 2% on a home sale. A seller of a $300,000 home would have to pay $1,500 to $6,000 when they sell, depending on which tax rate a municipality adopted.

These additional taxes would be on top of other fees homeowners either paid over the course of their homeownership or as part of selling their home. Homeowners already pay a surcharge on their property taxes in communities that adopted the Community Preservation Act, a portion of which is allocated for affordable housing. If a homeowner has a septic system, they have to pay for a Title V inspection and any repairs the inspection may reveal under the commonwealth’s strict and expensive repair rules, which could be in the tens of thousands of dollars. They also have to pay for an inspection to certify the smoke and carbon monoxide detectors are compliant, the rules for which depend on when a home was built or renovated. There is also the cost any repairs the home seller agreed to do after the buyer’s home inspection. Other costs include sales commissions, attorneys fees, and moving costs. It all adds up.

On the flip side of that, homeowners with a mortgage also get a substantial subsidy every year in the form of a tax write-off on the interest of mortgages up to $750,000. So the higher the mortgage, the higher the tax benefit. Economists have cited the mortgage interest deduction as a driver of economic inequality. It also helps drive up home prices. Homeowners also currently pay no federal tax on the equity earned on sale of their home, up to $250,000 and $500,000 for single and married people, respectively.

Many home shoppers not seeking Chapter 40B affordable housing have been struggling to find a home they can afford without state help. Cities and towns need real zoning reform can help with that and Chapter 40B efforts. Each community has their own zoning rules. Some easy things can be done, like allowing owner-occupied, multi-unit buildings in more areas and reducing minimum lot size & road frontage requirements. After years of inaction by the state legislature, Gov. Baker was finally able to sign his Housing Choice bill into law this year, which reduced the threshold to pass a zone change from a 2/3 supermajority to a simple majority. But those who live in towns where those decisions are made at Annual Town Meetings need to show up and pass those measures, assuming town officials add them to the agenda.

Any serious conversation about increasing the housing stock needs to include a discussion about reducing construction costs, as well. Baker’s Housing Choice bill was part of a larger package, which included development of a net zero building code for towns to adopt, which, despite reducing the operating costs of a home and the benefits to the environment, will increase the upfront construction costs of new homes. And that is on top of the already sky-rocketing lumber and other materials costs. And that is to say nothing about the lack of a qualified labor force, the hard-working trades people needed to build these homes. Then we will undoubtedly need to incentive builders to build more starter homes, because most new construction is for higher-end homes.

Housing in America faces significant headwinds, and they are all of our own making. Whether that is through our choice, our silence, or our indifference. The National Association of Realtors spent the most in lobbying in 2021, according to the Center for Responsive Politics. It was second largest spender in lobbying in the years prior to that. As a Realtor myself, I don’t think my trade organization should be steering housing policy. I think the results speak for themselves. Assuring our society’s housing needs are met is our responsibility. We need to take more responsibility for it.

Thank you Greening Greenfield and Franklin County Continuing the Political Revolution (FCCPR) for starting the conversation locally.

Michael Seward is broker/owner of Michael Seward Real Estate.


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