Reassessment Shows Most Property Values Decline
BERLIN – The latest batch of reassessment notices hit mailboxes in a vast swath of Worcester County this week, and most in the assessed area saw their property values decline since the last reassessment, but the slope of decrease is far less pronounced than the exaggerated spike upward seen three years ago.
Over the last 12 months, assessors with the State Department of Assessment and Taxation (SDAT) have been re-evaluating residential and commercial properties in the southern portion of Worcester County, along with a vast section of West Ocean City, in order to determine property values for the purpose of taxation. West Ocean City was added to the southern section of Worcester for reassessment purposes a few years back in order to create geographic areas similar in size.
Property owners in the areas reassessed this year received their notices this week and most saw their property values decline by an average of around 14 to 15 percent, based on a variety of factors. By comparison, property values in areas across Maryland reassessed this year declined by an average of 22 percent.
SDAT Director for Worcester County Robert Smith said this week the county’s values did not drop as significantly as other areas of the state because of the general stability in the south end. The north end of Worcester County, with its high-end real estate concentrated around the resort area, is far more prone to fluctuations in assessed values.
“The south end of the county has always been a little less susceptible to big spikes and big decreases in values,” he said. “That doesn’t mean they don’t see the same effects. It just doesn’t see the same peaks and valleys. Property values are a lot more stable in the south end.”
Smith said the average decreases in the south end would likely have been less pronounced than they were if West Ocean City hadn’t been lumped into the assessment area a few years back.
“The assessments in the south end decreased at a rate much slower than we’ve seen in the north end for the most part,” he said. “This latest group saw an average decrease of around 14-15 percent, which is much lower than the state average of 22 percent, but West Ocean City probably pulled that average up some.”
For those reassessed this year, lower property values will likely mean lower property taxes paid to the county, assuming the property tax rate in Worcester remains the same. County officials are already wrestling with declining revenues and the increased cost of doing business in the current recession, but County Commission President Bud Church said during an Ocean City Economic Development Committee meeting on Wednesday there did not appear to be a political will to make up the difference with a tax hike.
“The property assessment values went down,” he said. “They went down 21 percent at my house. I pay less in taxes, but the county gets less money. The good news is, Worcester County has not raised taxes and will not raise taxes this year. I believe we have the votes to do that.”
Smith said jurisdictions all over the state are likely considering property tax increases in the face of declining values. Some will likely keep tax rates the same and absorb the revenue loss, while others will not be able to resist increasing property tax rates in order to sustain government services and avoid layoffs or pay cuts for employees.
“It’s really a double-edged sword,” he said. “For property owners, if the county keeps the tax rate the same, they will pay less in property taxes. If they raise it a little, they could pay the same or if they increase it significantly, some property owners could pay more in taxes even though their values have decreased. The county has some tough decisions to make.”
Smith said about 88 percent of the properties in the recently reassessed areas of Worcester went down, following a statewide trend. Those that stayed the same likely saw their values stay the same or increase slightly for a variety of reasons.
“Those that increased likely did so because of improvements,” he said. “In this economy, people are just holding on to what they have, but they might be putting on a new roof or replacing siding, or doing that bump out or apartment over the garage.”
While property values in Worcester have declined steadily since the economy went south taking the real estate market with it, the slope is far less pronounced then the sheer cliff seen on the front end. Before the economic slowdown, property values in some areas of the county spiked up as high as 70 percent
“After spiking up so dramatically for several years there, we really started seeing the decline start around the end of 2007,” he said. “Those increases of around 70 percent in 2003, 2004, 2005 were the largest of any county in Maryland in my long history of doing assessments.”
Of course, what goes up most often comes down, but the roller coaster ride is far less steep on the back end of that spike, according to Smith.
“As steep as the increase was, the decline has been much less severe,” he said. “The property values are steadily declining, but they are coming from such a high number that the decline is less pronounced. They might get back to levels where they were before the big increases three, four, five years ago, but we’re not there yet.”