City Councillor Lydia Edwards (District One, Boston) stepped forward recently in support of a proposed real estate transfer tax hike, the money going to help mid-range and lower-range income people buy into the Boston housing market. We also support the proposal. Here’s why :

There are actually two real estate transfer tax hikes before the legislature. The first one, filed by Governor Baker in January, would raise the transfer tax by one-half, the money to be earmarked in support of climate resiliency efforts. Baker’s bill has received plenty of publicity. Less has been given to the second proposal, the transfer tax which is the subject of this column. It would double the transfer tax from the present $ 25 per thousand of value to $ 50 per thousand. Baker, when questioned about this bill, seemed unsure of its details, which is not all that surprising, given the lack of public attention shown this proposal. Would he support it ? We will see.

I would hope that he will do so, and of course that means that Speaker Robert DeLeo will need to support it as well, because neither transfer tax bill will get to Baker’s desk unless Speaker DeLeo brings them to a vote. When Baker first proposed his climate resiliency tax, legislative leaders were shy to sign on. DeLeo and Aaron Michlewitz, the House’s new Budget Chief, opined that they didn’t need the extra money just then. It appears that they have now reconsidered, at least for Baker’s climate resiliency tax. No word yet on the larger transfer tax proposed to fund affordability purchases.

Edwards urges adoption of the second transfer tax, a bill filed by State Representative Mike Connolly of Cambridge, because, so she argues, the affordability crisis is forcing current residents of her District (and others) to have to move, often to far away, in search of housing that they can pay for. This is hardly news. we all know that the Boston real estate market has boomed almost to the breaking point, leaving ordinary earners far behind the wave. Edwards supports the bill’s allocation of its funds to neighborhood housing trusts. I’m not so keen on this specific, but she has mute ideas for battling the housing crusts than that.  Earlier this year she endorsed permitting people to build add–on apartments to their homes, even a small unit in one’s back yard, if need be. She’s got hold of an idea now gathering attention in Boston and other cities.

Alterbatuves to the neighborhood land trust idea are but hard to come up with :

( 1 ) Some Massachusetts cities have had programs granting mortgage money to buyers, with no payback, on condition that they live in the home for at least five years, the money to help pay the buy price of a home. Any funds raised by the proposed transfer tax could allocate to this sort of City program.

( 2 ) Funds might be used to create a kind of city equivalent of the Federal government’s Section 8 certificate program, whereby lower income renters pay market rate, of which they pay only the portion thereof that their income affords, the balance being paid via the certificate.

( 3 ) the transfer tax funds could be applied to the State’s earned income tax credit (EITC), raising eligibility from the present $ 32,000 level (I think that is the amount) to maybe $ 45,000 or even to $ 59,000 — the median earner income in greater Boston — but solely for eligibles upon their applying to buy a home.

i would hope that the Connolly bill, if enacted, might prefer these uses.

It seems that real estate industry lobbyists have spoken in opposition to this transfer tax, saying that it would chill the market. I am not persuaded that a 2 and 1/2 percent tax will turn back a market in which $ 500,000 is below the average sale price and $ 2,000,000 not uncommon even in what used to be working-class neighborhoods of Boston. Presently, if you are a long time homeowner, who bought an East Boston home, for example, in 1980 at $ 35,000, and you now sell for $ 700,000, are you really dissuaded by a tax that docks you $ 35,000 instead of $ 17,500 ? If need be, brokers can absorb some of the tax by accepting a four percent commission rather than the traditional five percent.  When houses in “Eastie” were selling for $ 125,000 — not long ago at all — a five percent commission was $ 6250. Today, at $ 700,000 — not an uncommon price these days — a four percent commission is $ 28,000. Not bad — and let’s note that whereas very few homes sold at the lower price, because fewer people wanted then, today, at $ 700,000, everybody and his cousins want in. Thus a broker who might have sold five houses a year in 2004 might sell 12 houses this year. (Yes, there are many more brokers now; but that’s how it has always been in real estate. Lots of brokers in the boom times, not so many in the bad years.)

Councillor Edwards, I have to say, is not shy about the stuff she supports. I don’t always agree with her stand, but in far more cases than I had expected, I do support what she supports. (Disclosure : I am a donor to her committee.) It’s always smart to listen to her arguments for stuff. In this case, it’s smart to give her transfer tax argument serious thought even if you have doubts about its success. The affordability crisis is real, and very little of what most Boston politicians are offering as a response makes any real world sense. This proposal makes all kind of good sense.

— Mike Freedberg / Here and Sphere