As the national economy slows, Maryland's property values are peaking at the highest levels in eight years, state assessment officials said yesterday as they mailed 621,000 notices to one-third of the state's taxpayers.
Led by a surge in the value of waterfront properties and high-priced luxury homes in Baltimore City and Anne Arundel, Montgomery and several Eastern Shore counties, the average statewide property assessment increase of 3.4 percent for 2001 is more than triple the increase of three years ago, when the same properties were last examined.
That's still a far cry from the peak increase of 17.3 percent in 1984 - before state and local governments enacted assessment caps to limit property tax increases - but it's a big improvement after many years of nearly flat real estate values.
"The market is very strong the past three years. Assessments follow the market, and the market is up," said Ronald W. Wineholt, director of the state Department of Assessments and Taxation.
About 57 percent of homeowners will receive assessment increases of more than 5 percent, he said.
One-third of each jurisdiction is reassessed every year, and the new property values are phased in over three years.
Higher property values are the result of the better and more numerous jobs now available in Maryland, economists say.
Anirban Basu, director of applied economics at RESI, the consulting arm of Towson University, said Maryland has strong growth in good-paying jobs, reflecting "the underlying strength in the economy" that will see the state "fare better [than the nation] in the impending slowdown."
That's in contrast to the situation five years ago, he said, when a loss of manufacturing and financial-service jobs dragged down the local economy.
"In 1995, Maryland was still mired in slow economic growth, ranking 44th in terms of job growth. Here we are in the year 2000, and Maryland ranks 12th to 14th in growth, and the quality of jobs being added is quite high," Basu said. "We've come through an extraordinary time in Maryland's economic history."
The best evidence of that is found in Anne Arundel, with a 4.9 percent assessment increase, and the Eastern Shore counties of Kent, Queen Anne's, Talbot and Worcester, which all recorded increases of 4.9 percent to 5.9 percent - leading the state. Montgomery County (4.5 percent) was right behind.
Baltimore City (3.4 percent) matched the state average this year, beating Baltimore (2.1 percent), Harford (3.2 percent) and Carroll (2.6 percent) counties' average increases. Howard County's increase was slightly higher at 3.5 percent.
"Baltimore City has enjoyed a tremendous resurgence. It's just been phenomenal what happened in the city," said Patrick T. Welsh, president of the Greater Baltimore Board of Realtors. Welsh credits the year-old administration of Baltimore Mayor Martin O'Malley for being "far more sensitive to the business community" and working to create more housing downtown.
The city's northern tier, including the hot areas of Roland Park, Guilford and Homeland, and the booming downtown business district were reassessed this year, Wineholt said.
"There were 41 homes sold [in Baltimore] in 2000 for over $500,000, and most sold in less than a week," Wineholt said. "The downtown business district was up about 20 percent [over three years]."
Doug Brown, the city's public policy analysis supervisor, said the improved property values are "more widespread" than just the areas reassessed this year.
"We need every penny, but we're happy to have that growth," Brown said. The city's 4 percent assessment cap will save residential taxpayers $1.3 million that they would have had to pay without it, he said, adding that "the homeowners are protected" from higher taxes.
In Kent County, the state's leader with 5.9 percent, assessment supervisor Nancy Unruh said waterfront areas around Rock Hall "have really taken off." People interested in weekend and retirement homes are buying older homes and renovating them, she said. "They're not local people," she said, expressing worry that Rock Hall's quiet, peaceful atmosphere might be changing.
While some shore counties are prospering, Prince George's County recorded the state's lowest assessment increase - 1.6 percent for next year. But county assessment supervisor James P. Soresi is encouraged, he said, because "we're seeing the market increase in old, established neighborhoods."
Soresi said values in Prince George's are starting to climb, even in older, inside-the-Beltway communities such as Hyattsville and College Park, which were reassessed this year.
Baltimore County - where lower-income western county neighborhoods such Arbutus, Lansdowne, Baltimore Highlands and Westview were reassessed - saw only a 2.1 percent average increase, the lowest in the Baltimore metropolitan area.
Property values in the lower-income communities canceled rising values in Owings Mills and Catonsville, said James W. Roesner, assistant assessment supervisor.
Anne Arundel (4.9 percent) got a boost from homes selling for more than $300,000 in Severna Park, Pasadena and Gibson Island along the waterfront, said William F. Smouse, that county's assessment supervisor.
"The buyers have been out there. They've been snapping them up. It's the high end that seems to be driving that high percentage," he said.
But county budget director John R. Hammond noted that Anne Arundel's revenues won't benefit much from the higher values, because a county law limits total property tax revenue growth to the rate of inflation.
"Our new construction has been contributing more than reassess- ments," Hammond said.