Assessments on residential and commercial property will rise around the state an average of 9.1 percent, continuing a years-long upswing in values used to calculate the taxes property owners pay.
This is the sixth consecutive year of increases. Assessments mailed Thursday to owners show increases in every county and Baltimore City, according to a report by the state Department of Assessment and Taxation.
“It was the first time since 2008 that all counties have seen an increase in their property totals,” said Charles Cluster, the department’s real property state supervisor. “I think that’s indicative of what’s been going on. I’m seeing steady growth. It could turn but for the foreseeable future, I see slow and steady growth.”
The state reassesses a third of properties on its books each year, and this year assessments rose on 87.5 percent of the 696,974 properties.
Homeowners’ assessment rose an average of 8.2 percent, and commercial owners’ assessments rose an average of 12.5 percent, the state agency reported.
“It confirms what we are seeing in the residential market, which is a strong housing market but constrained by low supply — which can make it challenging for first-time buyers,” said Merry Tobin, president of Maryland Realtors. “This is not a surprise. We’ve known prices are going up steadily, not running up.”
Tobin added that the increased values bode well for a strong selling season in the spring.
Counties with the biggest jumps in assessed value among residential properties include Baltimore, Caroline, Charles and Prince George’s, which all had increases over 10 percent.
The assessments are phased in over three years, and property owners pay higher taxes to the state and county where they live based on local rates. The state caps increases to 10 percent a year.
Most counties and the city also have caps limiting the increases from 2 percent to 10 percent annually for homeowners who fill out a one-time application. Called the Homestead Tax Credit, it has no income requirements. Another program called the Homeowners’ Tax Credit does limit property taxes based on income.
The department planned to include a page in the letters to property owners about both tax credits, which the state says saves property owners more than $260 million in taxes a year.
Still, the increased assessments typically bring protests because of the tax implications. Cluster said about 3.6 percent of those reassessed officially appeal; of those, 30 percent to 35 percent are able to get the values adjusted.
Prince George’s County had the largest increase at 19.2 percent. Cluster said that was due to rising values in recent years around National Harbor, a large commercial development along the Potomac River in Oxon Hill that includes the MGM National Harbor Resort & Casino. New housing for students near the University of Maryland, College Park, was also a factor.
But Veera Phillips, president of the Prince George’s County Association of Realtors, said she found such a large increase surprising.
“The market here in Prince George’s County is strong and prices are rebounding, although we haven’t recouped all we lost in the downturn,” during the last recession, Phillips said. “I think that 19 percent is exorbitant. I don’t know that it truly reflects the market rebound. I think what will happen is a lot of people will challenge that level of increase.”
She noted that while the county has been in a seller’s market, business cooled a bit toward the end of the year, with fewer homes sold in November year over year and properties taking longer to sell. It is too soon to say whether that’s a seasonal shift or the start of a cooler market, she said.
Allegany, Kent and Somerset had the smallest increases, all less than 3 percent.
Among commercial properties, large increases were seen in Frederick, Montgomery and Worcester — all had assessments that jumped more than 15 percent.
The rural Eastern Shore county of Wicomico rose the most: an average increase of 30.9 percent.
Cluster said there was no one project in Wicomico that led to the large jump — just higher sales prices and rents and lower vacancies generally.
David Ryan, executive director of the Salisbury-Wicomico Economic Development Corp., attributed the jump in commercial assessments to several factors, including a fast-growing population in the county and specifically in areas such as Salisbury and Fruitland, sections of the county where properties were re-assessed. Salisbury is benefiting from its proximity to beaches and its location at the crossroads of routes 50 and 13, he said.
“We’re clearly a regional hub for the surrounding area,” Ryan said.
Commercial property values have been increasing as well because of low supply of such properties, he said.
“The good news is we have low vacancies, but the bad news is we’re looking for more product,” he said.
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The county also is benefiting from the health of economic sectors such as agribusiness, health care and higher education.
“I’m not surprised at the results given the tremendous growth we’ve seen over the past few years,” Salisbury Mayor Jake Day said in a statement, adding that city officials have focused on boosting the economy. “These significant and dramatic increases in value represent concrete evidence that those efforts are working.”
Commercial assessments in Caroline, Dorchester and Kent dropped small amounts, but residential assessment growth outpaced those declines.
The department largely bases assessments on property sales, usually broken down by subdivision. There also can be other factors, such as improvements to the specific or surrounding homes or buildings.
Cluster said the rising values reflect growth in the development and sales of commercial and residential real estate in the last three years. Drops in prices take two or three more years before they are reflected in the assessments, he said.
Commercial real estate brokers in the Baltimore area have been reporting record sales and leasing of warehouse properties, largely to meet quick delivery demands from people who order goods online. Median home prices in the region, however, began dropping in August after a sustained rise that peaked in June at $285,000, according to MarketStats by ShowingTime based on listing activity from Bright MLS, the region’s multiple listing service.
Home prices, however, remain historically high.