On Wednesday, April 4, 2018, a public hearing was held to advocate with the Board of Aldermen to pass legislation to create a Real Estate Transfer Fee. The fee would provide meaningful funding to pursue affordable housing work in Somerville over the next decade. SCC’s Affordable Housing Organizing Committee helped rally residents to show their support and to testify about why preserving Somerville’s affordability is critical to maintaining the character of the City.
You can still indicate your support for a Transfer Fee with as few exemptions as possible by sending an email (a short email will do!). Send it to BoardOfAldermen@somervillema.gov. Let them know that Somerville needs funds from a source like the Transfer Fee for needed affordable housing initiatives:
- Continuing with the 100 Homes campaign (acquiring and deed-restricting properties, to take them out of the speculative real estate market). As discussed in the note at the end of this email (“Why does preserving affordability cost so much?”), acquiring and deed-restricting just 45 properties has almost exhausted the CPA funds available for affordable housing for the next 20 years.
- Developing meaningful amounts of new “purpose-based” affordable housing that’s affordable to families with incomes at 50% or 80% of the Family Median Income (see chart below). In order to leverage State funds and federal tax credits, we have to be able to show a local contribution.
- Supporting hoped-for initiatives like the tenant right of first refusal, which would allow tenants to buy the unit they’ve been renting, by matching an offer their landlord has received from a third-party buyer. Without a source of subsidy assistance, only tenants with six-figure incomes would be able to benefit.
- Creating a land trust that could establish and protect the affordability of residential property (and perhaps even commercial property, to ensure that the small shops that have given Somerville squares their special character can afford to remain here).
Maintaining the Character of Our City
Without affordable housing, Somerville will lose the socioeconomic, racial, ethnic, and cultural diversity — and the artists and musicians — that have made this City so special.
Without affordable housing, Somerville will lose even more of our families, undercutting the viability of our school system, and the vitality of our neighborhoods.
Those of us who were fortunate to buy a home before property prices spiraled out of sight are realizing incredible gains — 5-10% increases in our property’s value every year. Someone who bought a home 10-15 years ago has seen their property values double or almost triple. Someone who bought a home more than 20 years ago has almost surely seen the value of their home triple. By contrast, inflation over the past 20 years has only been about 53%, so property value increases like what we’ve seen in Somerville represent an amazing return on investment.
Although many of us have invested time and money in improving our property, that’s not what’s driving this crazy market. It’s all about location, location, location. Somerville has become a really hot real estate market, because of the culture and the community we’ve come together to create. It’s been a collaborative effort of renters and owners, teachers and entertainers, chefs and civil servants, gardeners and techies, and everyone else. In many other markets, a homeowner is lucky to get back even a little more than what they’ve put into their house when they sell it. In today’s Somerville, a dilapidated 6-unit rooming house next door to me sold for $1.2 million, even though it needs of a gut renovation.
Somerville is a great place to live, and its become a great place for speculators to invest their money. The only way we can preserve affordability is by removing properties from the speculative market. And that takes money — the kind of money a transfer fee could raise.
A Meaningful Way to Preserve Affordability
Cumulative, a 1% transfer fee could raise between $6 million and 10 million annually. (Apparently $1 billion changed hands in property transactions last year. A few years ago, we were talking about $700 million in annual property transactions.)
In terms of an individual owner, a 1% transfer fee barely makes a dent in the 200% to 300% return on investment that those of us who’ve owned property here for 10, 15, 20 years or longer can anticipate. (Because the return on investment in Somerville property has been so high, a 2% transfer fee on property flipped within five years of purchase probably isn’t enough to discourage speculation.)
That’s the message the Board of Aldermen needs to hear. That it’s essential to preserve affordability if we want to preserve the community we love. And that a small Transfer Fee with the fewest possible exemptions is a reasonable way for property owners to give back to the community, given all of the value that the community has added to their property.