Second of two articles
Owning a house that has jumped $200,000 in value over just three years might sound like a handsome investment return for merely staying put. But Stanley and Alicia Miller aren't popping any champagne corks.
The Millers, who live on a fixed retirement income, are bracing for higher property taxes -- now about $3,000 a year -- on their four-bedroom split-level house in the Kemp Mill Estates neighborhood of Silver Spring. Property values there have risen 85 percent since 2002, among the stiffest increases in Maryland, according to reassessments mailed to residents last month. Valued at $242,000 three years ago, their home on Charlton Court is now assessed at $449,000.
A neighbor of Stanley and Alicia Miller said Kemp Mill Estates "is not a first-time buyers' neighborhood anymore." One-time starter houses now sell for $400,000.
(Andrea Bruce Woodall -- The Washington Post)
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With higher property taxes, the rising cost of Medicare and concerns about the future of Social Security, the Millers say they expect to dip into savings for the first time if they want to continue a retirement in which traveling and eating out remain affordable.
The increase in value "means nothing," said Stanley Miller, 69, a retired mid-level manager for the Department of the Army. "I don't consider the house part of my net worth because we'd have to spend all of it for a comparable home, unless we moved to West Virginia and lived on top of a mountain."
Surging property values are causing the Millers and their neighbors to take stock of their finances. Some say they are stuck in houses they cannot afford to sell, unless they downsize or move into farther-out suburbs. Others welcome the increase and are cashing in by refinancing and securing bigger loans for their businesses. Many say they are grateful they bought when they did because they could never afford their homes today.
Kemp Mill Estates residents also say the revaluations are changing the feel of their middle-class neighborhood a few miles east of downtown Wheaton, a place hardly anyone expected to become an enclave of half-million-dollar homes.
The neighborhood consists of mostly split-level and two-story houses of brick and siding that are about 45 years old. The driveways sport Hondas, Toyotas and minivans with a few years on them. Most back yards can accommodate a swing set comfortably but not a game of catch. Longtime residents say that among younger families in the neighborhood, both parents hold jobs to afford the mortgage.
The smaller starter houses, priced in the mid-$200,000s three years ago, now reach the low $400,000s -- out of reach for many first-time buyers. Some residents say their grown children have been forced to move farther out, to such places as Olney and Ellicott City, to raise their families.
"Our children can't afford to live in this neighborhood," said Rayford Howard, 44, who lives with his wife Adredaone cul-de-sac over from the Millers. Their two grown daughters and four grandchildren "are just priced out of it," he said. "This is not a first-time buyers' neighborhood anymore."
On the other hand, their 45-year-old, four-bedroom split-level house, which has grown in value from $171,000 to $391,000, has "definitely put a little jingle in our pocket," he said with a smile.
The Howards said the benefits have far exceeded the costs of any potential property tax increase. They said they have refinanced and taken out some equity to bolster their limousine business.
Roger Kurland, 61, said the rapidly growing value of his home gave him the wherewithal to buy out his two partners in Ben Yehuda Cafe and Pizzeria in the Kemp Mill Shopping Center. Kurland, who lives adjacent to Kemp Mill Estates with his wife, Agnes, and their two teenage children, said their assessed property value climbed from $385,000 three years ago to $585,000.
But Kurland said escalating housing prices also seem to be making Kemp Mill Estates less diverse. The neighborhood, which is close to three synagogues and several Jewish schools, has always been considered desirable by Orthodox Jews such as Kurland, who must walk to services. He said he believes the rising prices are driving away non-Orthodox Jews.
"People with other options, like people who aren't Orthodox Jews, would find other options more attractive," Kurland said.
He said he does not want to pay higher property taxes, but he wants to maintain the county's "excellent services," such as the libraries.
"How do people afford it?" Kurland said. "Everybody works."
Montgomery County Council President Tom Perez (D-Silver Spring), whose district includes Kemp Mill Estates, said the rising property values are just another indication that much of Montgomery has become out of reach to all but people with higher incomes. Meanwhile, he said, more and more homeowners are becoming "cash-poor and house-rich."
"The middle-class squeeze in Montgomery County is a very real phenomenon for people just struggling to make ends meet," Perez said.
Judy Bernhardt, 73, a retired occupational therapist, and her husband, Max, 76, bought their Kemp Mill Estates home in 1964 for $28,500. She said they would find the extra money to pay higher property taxes because they have no plans to move. But she said she is stunned at what their house is suddenly worth -- especially when assessors do not look at what's under the roof.
