A proposed transfer tax on the sale of luxury homes advances at the Monterey County Board of Supervisors.

A move to create a ballot measure asking voters to approve a transfer tax on the sale of luxury homes in unincorporated Monterey County advanced on Tuesday, March 17, after a 5-0 vote by the Board of Supervisors directing staff to come back with a feasibility analysis. The board has until June to make a decision whether to place such a measure on the November ballot.

The proposal by Supervisor Kate Daniels was for a transfer tax on the sale of homes priced at $10 million and above in order to create a local housing fund for the development of “missing middle” homes for middle income workers who make too much for subsidized low-income housing but not enough for market-rate units.

Daniels, representing District 5 that includes Carmel Valley, the Monterey Peninsula, unincorporated Carmel and Big Sur, appealed to her fellow board members on Tuesday, making the case that her district was in a unique quandary. The beauty of the region has created a strong market for second home and retirement home purchases, she said, creating two distinct markets: one for luxury homes and one for workers.

“Market one sets the home prices, market two struggles to survive,” Daniels said. “I believe that without intentional action, the Peninsula is unlikely to ever see the production of housing that is affordable to the community ever again. It’s simple, if left to market forces alone, developers will never produce units affordable to teachers, nurses, hospitality workers or public employees.”

There were 10 such transactions over $10 million in 2023, nine in 2024 and 11 in 2025, according to a county staff report. The average sales volume for the three years was $174.5 million. Potential annual revenue from such a tax could be as much as $1.7 million for a 1-percent transfer tax, and as high as $8.7 million at 5 percent, based on the average.

Public comment on the proposal was largely supportive and included testimony from a senior vice president of a bank who said she could only afford to live on the Monterey Peninsula with the help of a family friend who was renting to her family at below market rate.

Others, including Monterey Peninsula Unified School District Superintendent PK Diffenbaugh, Soledad Mayor Anna Velazquez and Christine Winge of Meals on Wheels of the Monterey Peninsula, shared the struggles of keeping employees, residents being pushed out of the area and senior citizens struggling to remain in their homes.

Adam Pinterits of the Monterey County Association of Realtors urged the supervisors to consider the potential negative impacts on the market when setting the tax percentage. He also asked them to consider pegging the tax to a percentage of the median home price, rather than a fixed amount, since home prices could rise dramatically. He also requested that the supervisors add a sunset clause.

Some speakers suggested that homes priced at $5 million and above be taxed, which Supervisor Glenn Church said he supported, along with Supervisor Chris Lopez. Both agreed the tax should be pegged to inflation.

Daniels said she picked the $10 million amount in part for political reasons, because it would raise a significant amount of revenue and “not upset a larger group of people.”

The supervisors voted to accept the staff analysis included in the report and to conduct a full feasibility and policy analysis, develop a potential tax structure and ballot measure options, conduct community outreach and return to the board with findings and policy options for a potential ballot measure.

If a measure were placed on the ballot, it would require a two-thirds majority to pass.