Demand for suburban condominiums also has surged -- especially near Metro stations in such communities as Wheaton and Largo -- driven by buyers who can't afford single-family homes but who want to stay close to Washington.
And as traffic continues to increase and commuting times lengthen, all types of housing in the close-in suburbs of Montgomery and Prince George's have become more attractive to prospective homeowners who don't want to spend hours behind the wheel.
Construction worker Julio Ramos at a large "in-fill" house under construction near smaller dwellings in the Wyngate neighborhood in Bethesda.
(Andrea Bruce Woodall -- The Washington Post)
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Throughout the state, and in particular in older, close-in neighborhoods, many homeowners also are deciding it might not be worth it to cash out and buy up. Instead, they are staying in their homes and adding on, making renovations or tearing down to build "in-fill" homes on lots in neighborhoods with no other developable land.
At the same time, local governments, already worried about crowded schools and clogged roads, have been limiting home construction, making what is already built even more valuable.
"In Montgomery County, one-third of the land is preserved, two-thirds is 80 percent built," said Meredith Weisel, a lobbyist for the Greater Capital Area Association of Realtors.
"Even if you want to build high-priced housing, it's difficult," Weisel said.
Prince George's also has been capping development, and pressure is increasing in Howard for limits on growth.
Although increases have occurred in the value of commercial property, a loophole in the state tax code has limited that growth, critics say.
In Maryland, commercial property owners can form limited partnerships that allow them to sell properties as corporate assets rather than as real estate. It means owners can avoid paying transfer and recordation taxes because the amount of the sale doesn't get entered into local land records. It also means that commercial assessments -- and commercial property taxes -- are artificially low. That has the potential to increase the need for higher residential tax collections.
Maryland lawmakers are hoping to close the loophole this year.
Still, many homeowners appear to be viewing increases in home assessments, at worst, as a mixed blessing. Assessors across the state say that despite the increases, appeals by homeowners are roughly the same as this time last year, about 1 to 3 percent of the total.
"People really do understand the values have gone up," said Doris J. White, supervisor of assessments in Frederick County. "I think underneath it all, they realize they made a good investment, that they invested at the right time."
Higher property values have the ability to produce instant cash for homeowners, either by allowing them to sell high or to cash out some of the increased equity for home improvements or other expenses.
And the tax windfall that localities are expected to reap this year also might be preventing any rush among county councils or commissioners to drop tax rates, a step they would have to take soon to limit increases on tax bills.
One state senator, Roy P. Dyson (D), whose home in Great Mills in St. Mary's County rose from an assessed value of $112,000 to $168,000 this year, says local lawmakers should be paying more attention to the impact on their constituents, rather than passively collecting what he says is a "back-door tax increase."
But that's a basic economic concept few may want to consider.
This summer, after property tax bills are dropped off by the mail carrier, local lawmakers will be able to use the extra funds to address community clamor for more classrooms, better roads and other infrastructure needs -- all without having to cast a vote for a local income tax increase.
And that leads to Economics 202: Fix up the infrastructure and the community becomes more attractive. That leads to higher home values and higher property assessments. The cycle begins anew.
Tomorrow: The personal toll -- how rising assessments are affecting residents of one neighborhood.
