Cape Cod, Martha’s Vineyard & Nantucket Consider New Home Sale Fee — What It Means for the Market

The housing affordability crisis across Cape Cod, Martha’s Vineyard, and Nantucket continues to intensify — and now local leaders are exploring a bold new funding solution: a regional real estate transfer fee designed to support affordable housing initiatives for year-round residents.

At The Charles King Group, we track the policies, pricing patterns, and economic shifts that impact buyers, sellers, and investors across coastal Massachusetts. This proposal has the potential to reshape future market dynamics on the Cape and Islands.

Below is a clear breakdown of what’s being discussed — and why it matters.

What Is the Proposed Housing Transfer Fee?

Local leaders are advocating for a 1%–4% fee on certain residential real estate sales, with revenue supporting:

• New affordable housing construction

• Workforce housing for year-round residents

• Long-term housing infrastructure and community stability

How the Fee Would Be Structured

Early proposals suggest:

• A 1%–4% fee on eligible transactions

• 90% of revenue retained by the town where the sale occurs

• 10% allocated to a regional housing fund

Proposed Exemptions for Primary Homebuyers

To avoid burdening typical buyers, officials are considering exempting the first $1M–$2M of a home’s sale price — shifting the impact toward higher-end and investment property sales.

Previous attempts by individual towns failed at the state level, but supporters believe a regional approach may have a stronger chance of passing.

Why Local Leaders Are Pushing for Action Now

Affordability challenges across the region have reached historic highs:

• Median single-family home on Cape Cod: ~$730,000

• Median single-family home in Chatham: ~$1.2 million

• Median condo in Provincetown: $1M+

• Only 22 condos sold in Chatham in the first nine months of the year

• Nearly 30% of the Cape’s workforce commutes from off-Cape

Key pressures include:

✔ Second-home and luxury buyers
✔ Seasonal residency patterns
✔ Investor activity
✔ Severe housing undersupply
✔ Restrictive zoning

These conditions are pricing out:

• Teachers

• Healthcare workers

• Municipal employees

• Skilled tradespeople

• Local small-business owners

The Land Bank Model: A Proven Blueprint for Success

The proposed transfer fee mirrors successful community-funding structures already used on Nantucket and Martha’s Vineyard.

Nantucket Land Bank

• Established in 1984

• Has generated up to $50 million annually during peak markets

• Funds support:

  • Beach access

  • Open space protection

  • Workforce housing

Martha’s Vineyard Land Bank

• Established in 1986

• Generated $14 million in 2024 alone

• Supported preservation of 4,200+ acres (7% of the island)

• Built on a 2% real estate transfer fee

These programs demonstrate that locally sourced real estate revenue can successfully fund long-term community goals.

Opposition & Political Hurdles Ahead

Not everyone is on board.

The Cape Cod & Islands Association of Realtors argues that cities and towns already have tools such as the Community Preservation Act, which allows property tax surcharges to fund:

• Affordable housing

• Open space

• Historic restoration

Opponents believe existing tools should be utilized more fully before creating new fees.

Additionally, similar transfer fee proposals — including Boston’s and several statewide initiatives — have failed at the state level.

Supporters counter that current funding sources cannot meet the scale of today’s affordability crisis.

Short-Term Rental Taxes Provide a Funding Precedent

In 2018, Massachusetts enacted a 2.75% excise tax on hotels and short-term rentals to address Cape Cod’s wastewater challenges.

The result?

➡️ Over $100 million raised for critical infrastructure improvements.

Housing advocates argue:

If regional taxes helped solve environmental challenges, they can help solve housing shortages.

What This Could Mean for Buyers, Sellers & Investors

If approved, the proposed fee may:

• Increase transaction costs for luxury properties

• Affect long-term appreciation timelines

• Change investor pro-forma assumptions

• Strengthen workforce housing foundations

• Support long-term economic stability

For high-end sellers and investors, the impact will depend on:

• Final fee percentage

• Exemption thresholds

• Whether the property is primary, secondary, or investment-use

The Bottom Line for the Cape & Islands

Cape Cod, Martha’s Vineyard, and Nantucket are at a crossroads.

Without meaningful action, the region risks losing the workforce that sustains its communities — even as demand and wealth grow.

This proposal reflects a shift toward:

• Locally controlled housing solutions

• Sustainable development

• Long-term economic resilience

At The Charles King Group, we believe informed decisions lead to the strongest outcomes. We monitor these policy changes so buyers and sellers can move confidently in a shifting landscape.

Thinking About Buying or Selling on the Cape or Islands?

If you want to understand how this proposal may affect:

• Your home value

• Your purchasing strategy

• Investment returns

• Long-term market trends

We’re here to help.

📍 Serving Cape Cod, South Shore, Boston & Coastal Massachusetts
📩 Contact The Charles King Group for a personalized market analysis.

Frequently Asked Questions

Will this transfer fee apply to all home sales?

No — current proposals suggest exemptions on the first $1M–$2M of a sale price, targeting luxury and investment properties.

Does this replace property taxes or CPA surcharges?

No. This would be a new revenue tool specifically earmarked for affordable housing initiatives.

How soon could this fee take effect?

Even with regional support, it requires approval from the Massachusetts Legislature, so implementation could take several years.

Will this hurt the luxury market?

Historically, transfer fees in other coastal markets have not significantly slowed high-end demand, but they may influence seller timelines or investor projections.