2008 real estate bust leaves a lingering problem in Harford

The fallout from the 2008 real estate bust lingers in Harford County and elsewhere, as evidenced by the latest round of property tax assessments for a third of the county's residential land, where values were off on average by more than 7 percent compared to where they were three years earlier.

That fallout does appear to be showing some signs of clearing, however. Modest increases were noted in commercial property assessments for the same areas of northern Harford, Havre de Grace and the southwestern corner of the county around Joppatowne.

The properties affected by the 2012 reassessments conducted by the Maryland Department of Assessments and Taxation were previously up for review in 2009, in the immediate aftermath of the real estate bubble's having burst, so this is the second cycle that the residential properties in the group showed valuation declines, which in one sense shows just how inflated a lot of real estate were in 2008.

It's also worthy of note that many properties in the Joppatowne area actually saw their values decline 15 and even 20 percent, according to the county's director of assessments, declines that reflect a high number of foreclosures in that part of the county including neighboring Edgewood.

Declining property assessments are a particularly disturbing economic trend, particularly over a span of several years as they drive deflationary pressure on for what is the biggest financial asset for most families. Bad as inflation can be, deflation is an economic problem that is regarded as debilitating, as it tends to be reflective of perpetually shrinking economic activity.

In the past, real estate in Harford County has seen bubbles burst that have resulted in short-term devaluation of residential properties. The late 1980s saw a particularly strong increase in property values, followed by a recession that resulted in some property devaluation, but this corrected itself in relatively short order and much the 1990s was largely a boom time.

What happened in 2008 is comparable, though admittedly on a larger scale, so it is unlikely there will be sustained deflation in Harford's residential real estate values. Other economic numbers that have improved, though at a painfully slow rate, combined with the assessments on commercial properties actually showing increases in valuation, are evidence that the problem is resolving itself.

Hopefully, the next round of assessments for this same territory three years along will show a brighter economic picture. Until then, there is a silver lining of sorts, namely that county property tax bills for the people living in the affected areas are likely to be dipping, or at least not going up so fast.

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