Boston, Massachusetts – On October 12, the Institute for Policy Studies released a critical new report analyzing the state of the Boston housing crisis and just how much Boston’s failure to enact a luxury real estate tax has been costing the city in funds for affordable housing.

According to recent analyses, the U.S. housing market is poised to see the second-biggest home price decline since the Great Depression. Meanwhile, the luxury housing market bubble has been stretching communities thin in the search for affordable housing, particularly in cities like Boston where a housing shortage severely impacts residents.

This new report finds that Beacon Hill’s inaction has cost over $20 million in funds for affordable housing.

Read the full report.

Read a summary of key findings.

Key findings:

The failure of the General Court of Massachusetts to act on Boston’s home rule petition for a luxury real estate transfer tax is costing the city potential revenue it could deploy to solve its housing crisis.

• As of September 1, 2022, 654 out of a total of 841 units have been sold in six luxury buildings in Boston.
• A total of 731 transactions were completed for a total of $2.17 billion in sales revenue (this number is higher than 654 because of initial sales plus resales and transfers). Total sales are expected to increase since there are still 187 unsold units and purchased units can later be resold. 41 were resold or flipped for a total gain of $11.7 million.
• A third (34 percent) of all of the units are owned by LLCs or Trusts and they account for $929.2 million in sales. A subset of these are anonymous shell companies.
• A two percent transfer tax on all units sold above $2 million in these six luxury buildings in Boston would yield $19.8 million. A tax on two transfers on just one unit at One Dalton Place, Unit 2804, would have generated $35,000 in revenue.
• If Boston implemented a more progressive transfer tax on housing with a 2 percent transfer fee on units that sold above $2 million and a 4 percent transfer fee on units that sold above $4 million, the potential revenue raised would be much more substantial. This more progressive tax regime would raise a total of $29.8 million in these six luxury buildings.
• A Boston household of three needs an income 50 percent higher than the Area Median Income to be able to afford a home in the Boston metro area. 47 percent of renters and 29 percent of homeowners in Suffolk County are cost-burdened.
• 55 percent of renters in the Boston metropolitan area have reported that their rent payments increased within the past year.

“Boston is simply asking Beacon Hill to grant it the power to tax itself and invest in solving its problems. This won’t cost the commonwealth a nickel but will unleash tens of millions that Boston can deploy to creating and preserving affordable housing,” said Chuck Collins, co-author of the report, director of IPS’s Program on Inequality and the Common Good, and a longtime Boston resident.

“A transfer tax is one of the many tools needed to ensure that the City of Boston has the resources to fulfill a vital social need, that is, to provide dignified and affordable housing to all of its residents,” said Omar Ocampo, co-author of the report, researcher with IPS’s Program on Inequality and the Common Good, and a longtime Brighton resident. “An individual or a corporate entity buying a condominium for $6 million has no problem paying an additional $80,000 fee for their luxury purchase.”

Among key recommendations, the report urges the City of Boston to:

• Pass Boston’s Home Rule Petition for a transfer tax
• Add Progressive Transfer Tax thresholds
• Require local real estate ownership disclosure
• Levy higher taxes on anonymous ownership (“Secrecy Tax”)
• Levy an Empty Homes Tax

Read the full report.

For more information and to speak with co-authors Chuck Collins and Omar Ocampo, contact Olivia Alperstein at (202) 704-9011 or olivia@ips-dc.org. 

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About the Institute for Policy Studies

For nearly six decades, the Institute for Policy Studies has provided critical research support for major social movements and progressive leaders inside and outside government and on the ground around the United States and the world. As the United States’ oldest progressive multi-issue think tank, IPS turns bold ideas into action through public scholarship and mentorship of the next generation of progressive scholars and activists.