Assessed Value Caution
The assessed value of a property is supposed to be what the assessor's office determines is its fair market value - that is, what it could be sold for on the open market.
But because of a state property tax reform act passed by voters in 1978 in California, the assessed value of a piece of property may have little to do with its current actual market value.
The tax reform act – called Proposition 13 or the Jarvis Initiative - placed a 2 percent cap on how much the assessed value of a piece of property could be increased each year, as long as the property was not sold.
Thus a piece of property that has been owned by the same person for many years may be worth far more than the assessed value, because the value of property in California increased much more in past years than the 2 percent annual cap.
If a property is sold, the assessor’s office will do a new assessment of the value of the property that reflects its sales price and hence its actual market value. Thus the more recently a property has been sold, the more likely that its assessed value is close to its real market value.
This also means that two nearly identical properties next to each other may have wildly different assessed values, because one has been owned by the same person for a long time (and thus was subject to the 2 percent annual cap) while the other was recently purchased (and thus has been re-assessed based on the recent sales price).
My best advice is to avoid using assessed values as a measurement of how much a property is actually worth.