Residential and commercial property values in Maryland will climb 12% on average next year, state officials said Tuesday, meaning higher property tax bills for many in what will be the fourth straight year of rising home assessments.
The Maryland Department of Assessments and Taxation reassesses a third of the state’s more than 2 million property accounts every three years to determine the taxes property owners must pay.
The overall statewide increase far surpassed 2020′s 8.1% increase. The 12% jump is the largest in any single year since 2016, when assessments rose 10.9%, for the same group of properties appraised this year. This is the ninth consecutive year that the state’s property values have risen during the reassessment process.
“This is a good indicator that the market remains strong and growth is steady here in Maryland,” said Michael Higgs, director of the Department of Assessments and Taxation.
Residential property values rose in all 23 counties and Baltimore for the fourth consecutive year, while commercial property values increased in 22 counties and the city.
The state’s report showed a reversal of a trend in Maryland in which commercial properties typically see higher percentage gains in value than residential properties. Most counties had double-digit gains in residential property values.
Strong demand for homes and below normal levels of inventory has driven home sale prices up, with demand fueled partly by people investing more in their homes during the pandemic, some experts believe.
“Seeing these assessments increase … underscores the real estate market remains a fantastic investment because property values keep increasing,” said Craig Wolf, president of the Maryland Realtors association.
Property values will likely continue to rise, he said, because inventory is short by about 80,000 units and demand is expected to remain high. Buyers have been willing to waive inspections, outbid competing offers and take other steps to finalize deals.
“Real estate continues to be a bright spot in the economy,” Wolf said. “In recent times, we haven’t seen this kind of market,” but one that is posing significant barriers for first-time homebuyers.
“Until we see a significant increase in inventory these challenges are going to still remain,” he said.
Though most homeowners in the group being reassessed — nearly 94% — will see an increase in values, some at unprecedented levels, tax bills are not likely to rise at similar levels for owner-occupied properties.
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The state’s Homestead Tax Credit, enacted through legislation, caps the increase on assessments at no more than 10% per year, and all Baltimore-area local governments have increases to owner-occupied properties capped at even lower percentages. They include caps of 2% in Anne Arundel County, 4% in Baltimore City and Baltimore County, and 5% in Carroll, Howard and Harford counties.
The group for 2022 includes 704,430 properties, with values for homes up 12.7% and for commercial uses up 9.7% since the group was last appraised in 2019. Tax assessment notices for the group were mailed out Tuesday.
In the Baltimore region, residential assessments rose the most in Carroll County, by 13.5%, followed by increases of 12.3% in Howard County and 11.1% in Baltimore County. Assessments for residential properties rose 10.3% in Harford County; 8.7% in Baltimore City and 8.6% in Anne Arundel County.
Statewide, residential assessments shot up the most — 27.2% — in Charles County, and edged up the least — 5.2% — in Kent County, while commercial appraisals increased most in Prince George’s County, by 16.2%. Commercial values were down slightly in Caroline County.
To arrive at updated assessments, state property assessors evaluated 74,673 sales within the group’s properties over the last three years. Any property value increase is phased in equally over the next three years, while any decrease goes into effect at once for the 2022 tax year.
State officials said Maryland property owners have been able to save more than $260 million in taxes each year through tax credits. The Homeowners’ Tax Credit sets a limit on the amount of property taxes owed based on eligible homeowners’ incomes.
The Homestead Tax Credit is available to residential owners who complete a one-time application and meet certain eligibility requirements. The credit limits a homeowner’s taxable assessment from increasing by more than a certain percentage each year regardless of their income level.