That’s not true. Let’s say your program removes the unit from the supply side but the “Home Buyer ( or renters)” are not removed from the demand side since they were never really part of it to begin with. They are only there because they are subsidized. As you indicated, under normal circumstances, they can’t afford to live there. Subsidizing them actually increases the demand side since there is now more demand than there would be otherwise. You are artificially expanding the demand pool.

I certainly understand that cost is not a determining factor of price. It is, however, a part of profit or loss. The transfer tax reduces profit. It’s the opportunity for profit that drives demand in this tranaction. (Laundry detergent is a consumable and not a good example) And demand drives price.

There is a lot of subsidized housing around to look at for example of this kind of programs. But I can’t think of a single example of it that I’d actually want to live in by choice. Why do think that forcing to be spread around to new locations will change anything. When people get things for free ( or subsidized) it gets abused and wasted.

The American system offers opportunity ……. not guarantees.

When I went to business school, I naively imagined that costs had something to do with prices. What I learned there, and reinforced subsequently as a strategy consultant, a business manager, and a business owner is that you want to charge the highest price at which you can sell, regardless of costs.

Or if you are selling a whole lot of the same things, like boxes of laundry detergent, the higher the price, the fewer people will buy. So you want to set a price where the number of people willing to buy at that price, times the profit margin on each unit at that price, produces the highest total profit.

Market price is just the price at which a willing seller and a willing buyer will consummate a deal. A transfer tax on a home sale would have no appreciable impact on housing prices.

What had the impact in Somerville was the inflationary spiral run up by people trying to outbid each other, i.e., demand out pacing supply. Permanently removing homes from the inflationary spiral by making them permanently affordable won’t drive up prices because, along with the homes, home buyers are removed from the demand side of the equation as well.

Anyway, we already have a “transfer tax” at the state level (.5% for fees). What the talk of a transfer fee was back then was a way for the city to fatten their already bulging wallets by implementing a hamfisted tax on people selling property. Back then – when values were increasing – some dimwits actually thought they could sneak that tax in. Luckily Benoit and others stood up and said “enough is qnough with you socialits!”

Oh.. and if you increase taxes on a seller – who do you think pays? The buyer. If you’ve ever run a business you would realize that. If the product cost for a product I sell goes up by X then I’m raising my prices by – at least – X. If I can — X plus. In an already depressed housing market; how would that go over?

Monica Lamboy? LOL!

Interestingly, after the Union Square hearing on Thursday I was speaking with Monica Lamboy, head of Somerville’s Office of Strategic Planning and Community Development. She mentioned to me that she had never before lived in a city that did not have a transfer tax on real estate sales. So if Joe Benoit were going to hand out asses, where would it stop?

Bill, long time no talk. It seems that you proposed a 1% “surcharge” tax on real estate sales. Somehow this was going to help afordable housing? LOL. You slay me, man. You absolutely slay me! Now that prices have fallen – what next? You’re lucky Benoit only handed in his resignation. He could have handed you your…

I have to say a huge and very heartfelt THANK YOU to G.S.Bogage for sharing his beautiful blog with us! What a commemoration to the splendor of that magnificent tree! I’ve shared it with my neighbors and others who loved the willow….we are so touched…and I want to say thank you

Sorry to take so long in getting back to you. No, I don’t “understand that any Tax like this is simply built into the price at the next transfer.” Nor does any competent economist.

Market price is the price at which a willing buyer will buy from a willing seller in a market with reasonably good information flow. As you probably know from personal experience, a seller will charge the highest possible price at which this can take place.

This applies to all products in a free market. The naive imagine that a product’s price is related to its costs. It is not.

And you are mistaken as well when you say, “Now you want to add another competitor to the Marketplace with your fund.” Permanently affordable housing is no longer “competitive.” It no longer contributes to the inflationary spiral. In fact, it helps moderate inflation because a subset of consumers do not have to bid up prices simply to live.

I do appreciate your acknowledging the definition of socialism: “1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goodsv2 a: a system of society or group living in which there is no private property b: a system or condition of society in which the means of production are owned and controlled by the state”

What the Affordable Housing Task Force proposed has nothing to do with socialism. Your reckless use of the term smacks of the demagoguery that describes single-payer healthcare as “socialist.” Socialism is where the government owns it. Socialism is the government’s buying up large stakes in banks while protecting the super rich who put the entire economy at risk, not directing a transfer tax to support affordable housing.