OCEAN CITY – It will be nearly a year before residents in northern Worcester County find out just how much their property values will decrease in the during the current re-assessment phase, but early indications are they will likely mirror the declines seen in Ocean City in the last cycle.
State Department of Assessment and Taxation (SDAT) Director for Worcester County Robert Smith this week briefed resort business leaders on a variety of issues related to property value assessments during Wednesday’s Economic Development Committee meeting. Smith said the re-assessment notices that went out for properties in Ocean City in late December represented an average drop in value of around 12-15 percent and early indications show a similar trend in places like Berlin and Ocean Pines.
“We’re seeing the exact same thing in the northern end of Worcester County with typical decreases of property values coming in at around 12-15 percent,” Smith told EDC members on Wednesday. “It’s something we haven’t seen in a long time, and it looks like it’s going to continue.”
Properties in Worcester are re-assessed every three years on a rotating basis with the county divided into thirds. Last year, Ocean City properties were re-assessed and the typical decrease came in at around 12-15 percent. This year, the northern end of the county including Berlin and Ocean Pines, along with places like Showell and Bishopville, for example, will be re-assessed.
Next year, the south end of the county will be re-assessed along with much of West Ocean City, which was split off from the northern end of the county two years ago in order to make the geographic regions similar in size. After years of dramatic increases, the latter segment saw a modest increase of around 11 percent two years ago.
Last year, property values in Ocean City declined for the first time in a long time after spiking upward drastically for several years and the northern end of the county is expected to follow suit this time around.
“If it continues the way it is, we’re going to be seeing a market like we’ve never seen before,” said Smith. “We’ve seen it down before, but not like this.”
EDC chairman and Clarion Resort Hotel owner Dr. Lenny Berger asked Smith about the trends for commercial properties. Berger said his hotel and other commercial properties continue to spike upward while residential property values decline. Berger added getting new commercial loans or refinancing existing commercial loans would likely be difficult at a time when many are coming due.
“I know we had a 60-percent increase in our assessment of this hotel,” said Berger during Wednesday’s meeting at the Clarion. “Commercial property and commercial lending is going to see the same thing that is going on with lenders for residential properties. I think we’re going to see a debacle. It’s looking like a very, very tough year. This is the worst recession I can ever remember.”
In terms of the Ocean City residential property reassessments last year, Smith said he cannot remember a time when it was so difficult because of the fluctuations in the market. He cited examples of extreme disparity in property assessments sometimes within the same building and blamed sagging home sales and the lack of an adequate sample size as the reasons.
“We saw condos with four units in them which are all exactly the same in terms of age and square footage for example with one unit assessed at $270,000 and another assessed at $400,000,” he said. “That’s an amazing thing from an assessment standpoint.”