Assessments on residential and commercial property around the state will rise in Maryland by an average of 8.1% in 2021, continuing a yearslong upward trend in the values used to calculate the taxes property owners must pay.
This is the eighth consecutive year that the state’s property values have risen during the reassessment process. Assessments mailed Tuesday to property owners show combined increases on residential and commercial properties in every county and Baltimore City, according to a Wednesday news release from the Maryland Department of Assessment and Taxation.
The year’s overall assessments closely match 2020′s 8.9% average increase.
The state reassesses about a third of its 2 million property accounts each year. Assessments rose on 86.3% percent of the 759,422 properties included in this year’s group, according to the release.
Residential property values increased on average by 7.5% and commercial properties saw a jump of 9.7% on average since the last “Group 3″ reassessment in 2018.
“All 23 counties and Baltimore City experienced an increase in residential property values for the third consecutive year, while commercial property values increased in 21 counties and Baltimore City. This is a good indicator that the market remains steady here in Maryland,” Michael Higgs, director of the assessments and taxation agency, said in a statement.
Commercial assessments in Talbot and Worcester counties dropped small amounts — 3.2% and 4.3%, respectively, according to data provided by the assessments and taxation department.
Higgs said each reassessment notice includes information about the homeowners’ and homestead tax credits, which he said saves Marylanders more than $260 million in taxes each year. Counties, cities and municipalities have caps limiting the increases up to 10% annually for homeowners who fill out a one-time application for the Homestead Tax Credit, which has no income limit and is available for principal residences. The Homeowners’ Tax Credit limits property taxes based on income.
The number of people looking to appeal their properties’ assessment value will likely increase as the reassessments continue to grow year over year, said Dee Dee Miller, president of Maryland Realtors. She said the upward trend likely stems from Maryland’s low housing inventory, which has declined further due to the coronavirus pandemic.
“The real estate market supports a good portion of state’s economy, and has remained strong in 2020 as it was in 2019,” Miller said. “It does mean that we’re continuing to be doing well, whereas other areas of the economy possibly are not.”
Miller said the public health crisis has not slowed the pace of the housing market. But the association will continue monitoring commercial property values, as businesses close and workplaces shutter in the wake of the pandemic.
The coronavirus pandemic has devastated other parts of the economy, particularly the service sector. Unemployment insurance requests skyrocketed to record numbers in Maryland and elsewhere, and some housing experts said a rise in foreclosures could be coming as early as 2021.
But historically low mortgage interest rates have fueled activity among homebuyers, and sellers have capitalized on the low inventory numbers to make sales above the listing price.
The abatement of the coronavirus could have long-lasting implications for the housing sector, Miller said, given the unpredictability of COVID-19 and the rate of its spread. The disease caused by the coronavirus could have unforeseen consequences on homeownership, financing and maintenance.
“The next 12 to 18 months will be interesting” as interest rates change, Miller said.
The Evening Sun
Prince George’s County’s residential and commercial properties recorded the most significant change in assessed value at a combined 13.4% increase. The counties with the next highest percent changes in combined residential and commercial properties were Frederick (11%), Wicomico (10.1%) St. Mary’s (9.4%) and Howard (9.3%) counties.
Meanwhile, Worcester (2.1%), Somerset (2.4%) and Queen Anne’s (3%) counties had the lowest changes.
In addition to Howard County, the Baltimore metro area’s other jurisdictions all saw increases in combined residential and commercial property values. Carroll County had a 7.8% combined increase, followed by Baltimore County, which had a 7.2% combined increase, and Harford, at 6.3%. Anne Arundel had a 6% combined increase, and Baltimore City had a 4.1% increase.
Frederick, St. Mary’s and Montgomery counties showed the highest increases among commercial property assessment values, at 18.2%, 15.7% and 14.4%, respectively.
The assessments of the properties in each group are stagnant for three years, and property owners’ values are capped depending on where they live. Property owners in Baltimore County and Baltimore City, for example, have their assessments capped at a 4% increase annually. The state caps increases to 10 percent a year, though most counties, except Somerset, Montgomery and Calvert counties, have capped property taxes at lower percentages.
The increased assessments typically bring protests because of the tax implications. Higgs said property assessors “continue to work hard work to ensure that all of Maryland’s properties are assessed uniformly and fairly.”