Md. homes assessment rise largest in decades

Notices being issued show average residence's value is up 52% over 3 years

December 31, 2004|By Larry Carson | Larry Carson,SUN STAFF

Soaring Maryland home values have produced the largest property assessment increases since 1980, when the state began phasing them in over three years, state tax officials said as they prepared to mail notices today to 692,000 homeowners.

Statewide, values for both residential and commercial properties are up an average of 15.5 percent a year for three years -- nearly triple the increase recorded three years ago when the same areas were last inspected.

Commercial values are up an average 28 percent over three years, compared with 52.2 percent for residential properties.

"It's the largest increase I've seen in my 30 years here," said Howard Levenson, assessment supervisor in Howard County, where residential land values are up 143 percent.

Baltimore's one-year increase was 7.2 percent for the poorest third of the city -- a midtown swath from west to east, plus Highlandtown.

However, city officials said there are bright spots, with prices and private investment going up in such older neighborhoods as Hampden, upper Highlandtown, Bolton Hill, Reservoir Hill and Dickeyville and new construction in Canton Crossing.

"This is an area of the city where 48 percent of the properties are rental properties" and thus have the lowest values, said C. Owen Charles, the city's supervisor of assessments.

Northern Baltimore County, which was reassessed from the city line to the Pennsylvania border, was up an average of 12.7 percent per year. That was surpassed by the suburban counties with the highest growth: Frederick's 18.7 percent, Howard's 16.2 percent, Anne Arundel's 15.9 percent and Carroll's 14.1 percent. Harford's increase was 12.5 percent.

Montgomery County -- where assistant assessment supervisor Daniel Ercolani said people are buying older homes inside the Capital Beltway to demolish them and build million-dollar mansions -- is leading the state with a one-year average increase of 21.7 percent.

Potomac, Bethesda and Chevy Chase, which have the county's most expensive real estate, were inspected this year.

"In Potomac and Chevy Chase, $1 million would not be an extraordinarily high selling price," he said. "It's all about location."

Time of high demand

Maryland's rising assessments reflect a nationwide high demand for homes. Nationally, the median price for existing homes rose 10.4 percent in November compared with the same month last year, and demand remained strong.

Sales of existing homes set the highest monthly pace on record for November, with 6.94 million homes sold compared with 6.13 million sales in November 2003, according to the Washington-based National Association of Realtors.

Economists, real estate agents and public officials credit low interest rates, strong job growth and low housing supplies for the phenomenon, which they say will likely continue.

In Maryland, fuel for the rapid price rises is coming more from outside the state than inside, said John Hopkins, an economist at the Regional Economic Study Institute at Towson University.

"The defense industry is attracting a professional part of the labor force that needs high-quality housing," and they want good schools, he said.

The problem "is that you're creating a larger dichotomy between the haves and have-nots," he said. "And unfortunately, a lot of those have-nots, like teachers, police officers and firefighters, provide a lot of the services that the haves depend on."

Anne Arundel County budget director John R. Hammond speculated that Washington commuters tired of living on the crowded Virginia side of the capital are moving to western Anne Arundel, which was the area reassessed. Growth in federal security programs, especially around Fort Meade, is helping to drive prices up, he said.

Most homeowners are shielded from the full brunt of the increases on their annual bills by the state's 10 percent cap on assessment increases. And 11 counties have lower limits, ranging from zero to 7 percent.

With a 4 percent assessment cap in both Baltimore City and Baltimore County, homeowners there won't see big increases on their tax bills in July. Carroll County reduced its cap this year from 10 percent to 7 percent. Howard, Garrett, Kent, St. Mary's and Worcester counties have a 5 percent cap; Prince George's is 3 percent, Talbot is zero, and Anne Arundel limits overall revenue increases to 4.5 percent or the rate of inflation.

Full tax bill

But homes that change hands go immediately to the full taxable value -- and the new homeowners receive the full tax bill.

"I hear it all the time that people are amazed at the value of their houses," said Baltimore County Councilman Vincent J. Gardina, a Democrat who represents the Towson area. But the 4 percent cap has kept residents happy about the value increase without making them angry about taxes.

Councilman T. Bryan McIntire, a Republican whose district covers much of the central county inspected this year, said it might be time to "consider reducing the tax rate."

West and east

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