Maryland tax officials are reporting a more than 23% overall increase in property values since the 2021 reassessment, a spike that reflects a strong housing market but will also mean higher property tax bills for many homeowners, even with local tax caps designed to cushion the impact.

While Maryland has seen a continuous uptick in values since 2014, this review showed the highest overall statewide value increase recorded in the last decade, according to Maryland archival data. It’s also the second time in two years that the overall reassessment value has gone up by more than 20%.

In the 2024 reassessment, the values of residential properties surveyed rose on average by 25.6% over the last three years while commercial properties saw a 17.6% jump.

About a third of the state’s 2.2 million property accounts are appraised on a rotating basis every year, which determines the amount of property taxes that home and building owners must pay. This year, “Group 3″ was evaluated for the first time since the 2021 reassessment.

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“Owning a home or business in Maryland continues to be a good investment,” said Michael Higgs, director of the Maryland State Department of Assessments and Taxation, in a Friday statement. He said each of the state’s 24 jurisdictions has experienced an increase in residential and commercial property values for six consecutive years.

The figures are calculated based on an evaluation of the 85,904 sales that occurred within the group over the last three years, according to the state. Of those, 96.6% saw an increase in property value from the last assessment. Tax increases are phased in equally over three years while decreases are fully implemented during the 2024 tax year.

Last year, Higgs told The Baltimore Banner that the increased values reflected “an awful lot of changes” in the real estate economy over the last three years, including inflation and supply-and-demand challenges. Several counties, especially those on the Eastern Shore and in Western Maryland, account for much of the increase, Higgs said, as more people flock to less-dense areas, buy investment properties and work remotely outside of larger cities and towns.

“It shows there’s an incredibly robust housing market from one end of the state to the other,” Higgs said last year. “And it shows there’s more room for supply in Maryland.”

A number of other factors could be fueling the rise in appraised values, including property additions and renovations, heavy sales activity in specific areas (such as Deep Creek Lake in Western Maryland, which accounted for much of last year’s increase, Higgs said) and higher premiums on available land.

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Higgs last year said state and county governments had not taken enough steps to address a limited supply of available homes, which is pushing costs up. He also noted that more investment companies are buying up lower-cost homes at higher prices, raising the floor of the market beyond the grasp of many first-time buyers.

“We’re not doing enough on zoning or other regulations that would encourage more housing right now, and I don’t see it in the pipeline,” he said.

Residential properties in Somerset (51.4%), Garrett (47.2%), Worcester (47.7%) and Washington (40.3%) counties recorded the highest changes in market value since the 2021 reassessment. In the commercial category, Worcester (32.5%), Calvert (26.8%), Cecil (25.2%) and Frederick (22.4%) counties led the pack.

Steve Kelley, Garrett County’s director of planning and community development, said Western Maryland and other more remote jurisdictions have seen a flurry of sales activity since the start of the coronavirus pandemic in 2020.

The added sales and tax revenues might be good for localities, he said, but can be painful for local residents who now face reduced inventory as well as higher home prices and tax bills.

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“Home builders can’t keep up with the demand for affordable housing,” said Kelley, who had not yet seen the state’s reassessment report and could not yet comment on it. “People are starting to realize that they can buy homes that don’t depreciate. That’s unfortunate for our locals.”

In the Baltimore region, Carroll County recorded the highest combined residential and commercial value change, at 23.5%. It was followed by Baltimore County (23.3%), Harford and Anne Arundel counties (22% each) and Howard County (20.5%). Baltimore City’s combined percentage change stood at 17.9%.

The increases in the Baltimore region were primarily driven by rising residential property values.

State law limits increases in the taxable assessment of owner-occupied residential properties to 10%, though the limits are even lower in most counties. In the Baltimore area, assessment increases for tax purposes are capped at 2% in Anne Arundel, 4% each in Baltimore City and Baltimore County, and 5% each in Carroll, Harford and Howard counties.

The caps are realized through tax credits calculated on any assessment increase on a property exceeding 10% (or the lower threshold set by a local government) from one year to the next. For example, if the owner of a home previously assessed at $100,000 gets a notice that their home’s phased-in reassessment is now $120,000, and their county caps the amount of the increased value that can be taxed that year at 10%, the credit would be applied to the taxes due on $10,000. In other words, a 10% assessment cap means an individual’s local tax bill will increase by no more than 10% over the previous year’s tax bill.

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The local caps are available through the Homestead Tax Credit, which can be accessed by filling out a one-time application.

Localities have the option of lowering a property tax rate to offset rising assessments. Counties and municipalities usually use additional property tax revenue to help make up their budgets.

Some homeowners are also eligible for credits against property tax bills via the Homeowners’ Property Tax Credit Program, which limits property taxes based on income level. The Homestead Tax Credit has no income requirements.

In a web post published last year, the Maryland Association of Counties emphasized that the overall statewide increase does not mean all property owners will see higher tax bills. The three-year, equal phase-in ensures that taxpayers aren’t overburdened during periods of considerable property value increases, the lobbying group said, and only about a third of all Maryland property owners are included in each group.

State tax officials sent out assessment notices to Group 3 property owners Thursday. Property owners can appeal their new assessed values within 45 days of receiving the assessment notice.