Assessments on residential and commercial property will rise in Maryland by an average of 8.9%, continuing a yearslong upward trend in the values used to calculate the taxes property owners must pay.
This is the seventh year in a row that the state’s property values have risen. Assessments mailed Dec. 27 to property owners show increases in every county and Baltimore City, according to a report by the Maryland Department of Assessment and Taxation.
The year’s overall assessments closely match 2018’s 9.1% average increase.
“All 23 counties and Baltimore City experienced an increase in residential and commercial properties for the second consecutive year, which is a good indicator the market remains strong and growth is steady,” said Michael Higgs, director of the assessments and taxation agency, in a statement.
The state reassesses about a third of its 2 million property accounts each year. Assessments rose on 76.66% percent of the 769,668 properties included in this year’s group.
Homeowners’ assessments rose an average of 7.3%, and commercial owners’ assessments rose an average of 13.5% since the last “Group 2” reassessment for 2017, the state agency reported.
Prince George’s County’s residential and commercial properties recorded the most significant change in assessed value at a combined 13.3% increase. The counties with the next highest percentage changes in combined residential and commercial properties were Wicomico (11.2%), Anne Arundel (10.8%), Frederick (9.8%), Cecil (9.2%) and Baltimore City (9.1%).
Baltimore County’s assessments on residential and commercial properties followed Howard County (8.3%) with an 8.1% increase. Carroll County (6.2%) was positioned toward the middle in its combined assessment, with a 6.3% increase in residential value and a 4.7% increase in commercial value.
Meanwhile, Somerset (1.2%), Kent (1.6%), Allegany (3.2%) and Garrett counties (4%) had the lowest changes.
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 have capped property taxes at lower percentages.
Higgs said each reassessment notice includes information about the homeowners’ and homestead tax credits, which save Marylanders more than $260 million in taxes each year. The homeowners’ credit limits the tax owed based on the homeowner’s income. The homestead credit sets a limit for residential property owners who complete a one-time application and meet certain eligibility requirements.
Still, some real estate agents and experts said they expect property owners will appeal the department’s assessments of their holdings. Justin Mullen, senior vice president at Anne Arundel County-based Hyatt Commercial, said there’s “no question” owners will take issue with the state agency’s findings, which recorded a 17.2% increase among commercial properties in Anne Arundel.
“It’s concerning,” he said. “It’s significantly greater than what the market has shown.”
Commercial properties in Montgomery (16.5%) Howard (14%) and Prince George’s (13.1%) also experienced assessment increases. But highest of all were Wicomico County’s commercial properties, which increased in assessment value by 21.7%.
Last year, commercial property assessments in Wicomico County also rose the most, by an average of 30.9%.
Christine Duma, the supervisor of assessment and taxation for Wicomico County, said the consecutive year of high assessment increases can be attributed to the region’s major property sales, which ranged from apartment complexes, hotels and assisted living facilities to car dealerships and restaurants.
“The commercial market continues to remain strong,” she said, adding that the increases shouldn’t negatively affect business owners. “The market is going up and we’re seeing it with the sales.”
Among residential assessment values, Prince George’s County saw the most growth (13.3%), followed by Frederick (9.8%), Cecil (9%) Dorchester (8.4%) and Baltimore City (8.3%).
Homeowners in Somerset (1.2%), Kent (1.5%), Allegany (3.6%) and Garrett Counties (3.8%) saw the lowest percent changes in residential assessment values.
John Harrison, president of Maryland Realtors, said areas with higher concentrations of development projects tend to see higher assessments. He said overall, increases in the state’s values point to a healthy economy.
He also said Maryland’s residential inventory is considered low, and with high demand to buy property, higher assessment values tend to follow.
“It’s good news, the economy is chugging along,” he said. “It’s all tied to jobs and the economy. In less populated counties, where things may have moved out, or closed plants, you’re not seeing the same growth.”
Local job growth and development contributed to the assessment increase in counties such as Prince George’s, he said.
Harrison also said it’s important to remember that assessed value and sales price are not necessarily related.
“Assessed value is usually lower than what you could sell it for,” he said. “It doesn’t always matter what the assessment says. It’s going to be tied to what kind of amenities you have, the condition, that kind of thing."
The assessments were based on an evaluation of 73,106 sales that occurred within this property group over the last three years, according to the department. If the reassessment resulted in a property value adjustment, any increase will be phased in equally over the next three years, while a decrease will be fully implemented in the 2020 tax year.