OCEAN CITY — The crucial reassessment of the vast residential and commercial real estate in Ocean City is nearing the finish line, and although the jury is still out on the final numbers, the trend is decidedly downward as predicted.
For the last nine months, assessors with the State Department of Assessment and Taxation (SDAT) have been reassessing the value of residential and commercial real estate in Ocean City for the purpose of determining their future tax burden. The reassessment of Ocean City property is part of a three-year cycle in Worcester County, which is divided into three large areas, each of which gets reassessed every three years.
“The real estate market is still showing a downward trend, and although it’s a little early to hang any real predictions on the percentage of decline, the assessed values in Ocean City will see a decline,” said Robert Smith, SDAT director for Worcester County. “The values might not decline at a rate predicted by some circles, but they are definitely going to be down since the last reassessment three years ago.”
Smith said most property owners will likely see their values go down, while some will stay about the same and others will actually go up for a wide variety of reasons.
Last year, the southern end of Worcester County, along with a vast section of West Ocean City, was reassessed and the average rate of decrease in value came in at 12 to 15 percent. Those sections of the county did not drop as significantly as other areas around the state because of the general stability in the communities.
For example, property values in areas reassessed last year across the state declined by an average of 22 percent. Smith said this week if it had been Ocean City’s turn for reassessment last year, the downward trend would have been even more pronounced.
“The values in Ocean City are going to go down in this cycle, but that shouldn’t be a surprise to anyone who has been paying attention,” he said. “If Ocean City had been reassessed last year, the downward spike would have been even more pronounced then what we are seeing thus far this year.”
Local and county governments are waiting with baited breath on the outcome of the resort’s reassessment, which will be used to determine the property tax revenue for the upcoming budget cycle. Many in local government have already predicted a budget processes even more difficult than in recent years because of the anticipated drop in property values in the resort.
The last time Ocean City properties were reassessed in 2008, the assessed values declined by an average of about 15 percent. However, the decline came on the heels of a tremendous period of growth in the resort. For example, six years ago in 2005, at the height of the most recent building boom in Ocean City, property values increased by an average of 25 percent in a single year, or 75 percent for the entire three-year cycle.
The current steady decline in the assessed property values is likely a correction after what was a significant spike upward for several years, according to Smith.
Despite the fact resort property owners will not get their new assessment notices for another two months or more, already the county SDAT office is seeing a flood of notices to appeal from Ocean City property owners even before the new notices go out. Smith said many of the appeals are spurred by worries about what might happen and not what will happen.
“We don’t tell anybody not to appeal,” he said. “That’s what we’re here for, but there is a system in place and now is not the time for appeals. I think what we’re seeing is neighbors talking over a fence about what their property assessments might be and their filing for appeals before they even know what the new values are.”