House values in Md. up 18.7%

State assessments on a third of properties sent to homeowners

December 29, 2006|By Larry Carson | Larry Carson,Sun reporter

State assessment notices mailed to 661,000 Maryland property owners today show another huge jump in home values despite talk of a flat housing market, with lower-priced properties increasing faster than higher-priced ones.

The 18.7 percent average annual statewide increase is down from last year's all-time peak of 20.1 percent, officials said. Most homeowners are protected from the full impact of the increases on their property tax bills by local assessment caps.

The still-hefty increases reflect the way state assessments work in relation to the current real estate market.

"The key is, we're following the market and looking at values three years old. We see homes are on the market somewhat longer, but the prices still remain strong," said C. John Sullivan, director of the Maryland Department of Assessments and Taxation.

Rising prices for less-expensive homes are good news for areas that have lagged in years past, such as Baltimore, southwestern Baltimore County, Glen Burnie and Prince George's County, where values rose significantly faster than those in neighboring higher-priced Montgomery County.

"The properties valued at less than $200,000 [in 2003] increased in price an average of 75 percent," said Barbara Clark, assistant supervisor of assessments in Anne Arundel County, where the northeast third, from Annapolis to Glen Burnie, was revalued.

Despite the housing slowdown, observers feel the long-term economic signs suggest future growth in housing values.

"Maryland has got so much going for it," said Daraius Irani, director of applied economics and the Regional Economic Studies Institute at Towson University. Proximity to Washington, the influx of federal defense jobs, emerging local high-tech science industries, and the Route 43 extension in eastern Baltimore County all point toward more good jobs and higher demand for homes, despite the current slowdown.

Still, Tom Ballentine, government affairs director for the Maryland Association of Homebuilders, said the slowdown and rising construction costs are hurting some builders. "There's some hope this market will reach its bottom and begin to improve in the second half of 2007," he said.

Baltimore's home values rose 19.5 percent, and city budget director Raymond S. Wacks said it's good news on several fronts.

"We're still going to show healthy growth in our property tax, but the vast majority of the increase will be deferred to future years" because of the city's 4 percent annual assessment cap, Wacks said. City taxpayers will save $39 million in tax payments this year because of the cap, and the huge increase this year caused by re-inspection of the northern third of the city will boost those savings to $72 million next year.

St. Mary's County's average one-year increase of 28.1 percent led the state and topped the 18.7 percent statewide average. Supervisor of assessments Sean Powell said buyers there, willing to commute 50 to 70 miles to Northern Virginia or Washington, are snapping up detached homes on 1 acre for about $350,000. Land is the key, he said. A 1-acre building lot that was priced at $38,000 three years ago is now worth $100,000.

Garrett County values grew the slowest, at 12.8 percent per year.

In Maryland, properties are reassessed every three years and the change in value is phased in. Local assessment caps, ranging from zero in Talbot County to a 10 percent maximum in six counties, limit the single-year tax increase. Since 2003 - the last time these areas of the state were evaluated - the overall increase in assessments is 56.1 percent.

Sullivan said the assessments were based largely on a review of 132,000 property sales, and the notices were redesigned this year to make them easier to read.

The commercial property market hasn't kept pace with residential home values, state officials said. Statewide, commercial properties were up an average 39.6 percent over the three years.

Ilene Kessler, president of the Maryland Association of Realtors, said conditions vary in different parts of Maryland.

Areas around Ocean City are overbuilt, she said, with at least a year's inventory on the market and concerns about storms driving prices down, while values from Frederick to Allegany County in Western Maryland are rising as commuters move farther west. In Central Maryland, job growth is fueling demand and has driven prices so high they're out of reach to many buyers.

"Howard and Montgomery have no work force housing - they really don't," she said.

Sullivan and others pointed out a major difference from last year - that homes priced under $250,000 are showing the biggest price increases.

"Now that the dust has cleared, affordability is more of a factor all over the state," Kessler said.

The counties with the typically highest home prices - such as Montgomery, Howard and Anne Arundel - grew at a pace below the state average. Baltimore, Prince George's, Somerset, Washington, Caroline and St. Mary's are above that average.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.