By Miranda S. Spivack
Washington Post Staff Writer
Thursday, January 5, 2006; B01

Housing values in many Maryland communities soared 67 percent over the past three years, the largest percentage increase in 25 years. In some suburbs near Washington and Baltimore, those values rose even more.

Residents began receiving letters outlining the increases this week, with many in Anne Arundel, Calvert, Charles and other counties seeing increases well beyond the statewide average. In Worcester County, home to Ocean City's thriving condo market, assessments rose 80 percent, the largest increase in Maryland.

News of the state's rising assessments is a mixed blessing for homeowners. On one hand their houses are more valuable than ever, but that is likely to lead to a higher tax bill.

Tax bills can rise only so much. State and local laws limit increases to no more than 10 percent -- less in some jurisdictions.

State officials say rising housing values are crossing economic lines and expanding into communities where the rate of increase had been less. In Montgomery County, for example, housing values in the eastern part of the county have lagged behind those in the more affluent neighborhoods to the west. In the most recent assessments, housing values along the Route 29 corridor rose 70.4 percent. A similar increase was seen in several Prince George's County communities inside the Beltway, where values rose 71.2 percent.

In Maryland, each property is reassessed every three years, and new assessments are phased in over the next three. (Appeals of assessments can be filed until Feb. 13.) State and local governments determine increases in property tax bills annually. Virginia and the District expect to send notices soon; increases are expected for communities in both jurisdictions.

Housing supply in Maryland continues to lag behind demand, driving values higher. An expected influx of new residents near Fort Meade in Anne Arundel and near military installations in Southern Maryland, as well as second-home buyers on the Eastern Shore, are also fueling the rise.

"Everything we read indicates the market may move a little slower but that values should be holding," said Bill Stansbury, supervisor of assessments for the Maryland State Department of Assessments and Taxation.

Lawmakers in many Maryland jurisdictions have signaled interest in providing some relief to taxpayers, which might not lower tax bills but could slow the rate of increase.

Gov. Robert L. Ehrlich Jr. (R) has discussed lowering the state rate. One of his potential rivals, Montgomery County Executive Douglas M. Duncan (D), has also talked about lowering local property tax rates. The annual property tax bill is a combination of state and local taxes.

In the recent Maryland revaluation, more than 700,000 properties, most of them residential, were reassessed. They had last been valued in 2002, when the real estate market was heating up.

Daniel Ercolani, acting supervisor of assessments for Montgomery, said assessments in the eastern part of the county were largely based on real estate sales prices between late 2004 and the end of 2005.

"Sales through that period were solid and strong," Ercolani said. "We certainly did not see any slowdown or turnaround in that time period."

Montgomery's Department of Park and Planning said that in the first half of 2005, the median price for a new detached house was $759,933 and for an existing detached house $500,000.

In Howard County, where assessments rose 74.3 percent on average, supervisor of assessments Howard Levenson said that a shrinking pool of developable land and a strong public school system are keeping property values high. Housing values are averaging about $400,000, he said. Assessments were in the eastern part of the county, including Elkridge, a community undergoing a revival.

John Erzen, a Prince George's spokesman, said an increase in development as well as new interest by homebuyers in inner Beltway communities contributed to the rise there.

"In Prince George's, we've got a lot of land. . . . A lot of developers are recognizing this," Erzen said. "They're recognizing we have the land, and certainly we have the population. That's bringing them into this county."

In Anne Arundel, the revalued land was in the south, including Annapolis, Crofton and Davidsonville, and sprawling, rural areas.

The region includes million-dollar waterfront houses and multi-acre estates beyond the South River, said Joseph Glorioso, supervisor of assessments. The mean sale price among assessed properties was $459,000 through Dec. 7.

The southern tip of Calvert, where most of the affordable housing lies, saw an average increase of 74.7 percent. "There just isn't that much developable land left," said Susan Kopanke, the county's assessor.

Frederick County had an increase of almost 71 percent in assessments, and St. Mary's County 69.1 percent.

In Charles, where the increase averaged 75.3 percent, residential waterfront properties shot up 95 percent. The area revalued stretched from the northern boundary with Prince George's to the southern tip but did not include Waldorf, the county's population center, said Robert Farr, supervisor of assessments.

"The prices haven't gone down, but it is taking longer to sell. . . . That's how things usually were before it started getting crazier three years ago," Farr said.

Staff writers Nick Anderson, Daniel DeVise, Tim Craig, Ovetta Wiggins and William Wan contributed to this report.