Assessed Value vs. Market Value

Assessed Value vs. Market Value gives you a clear, step-by-step way to understand what drives your bill, what to verify on your notice, and what to do if the numbers look off.

A common source of confusion is that your property’s assessed value (for taxes) is usually different from its market (fair market) value (what it would sell for). Market value is the price a buyer would pay under normal conditions, determined by supply, demand and comparable sales. Assessed value, on the other 2 hand, is set by your local government for tax purposes and often represents only a portion of market. In

plain terms

• Market Value: What your home could sell for today.
• Assessed Value: The value assigned by the tax assessor, used to calculate taxes

12 . Importantly, many areas legally limit assessments to a fixed percentage of market. “In some states, assessed value could be as low as 10% of fair market value, while others assess at 100%,” reports Rocket Mortgage. For example, if your home’s market value is $300,000 and your state has a 50% assessment ratio, your assessed value would be $150,000.

Why the Gap?

Often, assessed values lag behind market changes. If home prices surged, your taxes might not spike immediately if assessments are on a schedule. Many jurisdictions reassess only every few years or when a property is sold. Some even “cap” annual increases (e.g., California’s Prop 13 limits assessment growth to 2% per year 14 ). Thus, a long-time owner may pay taxes on a much lower assessed value than current market

• while a new buyer’s assessment jumps to sale price, raising taxes suddenly.

The reverse can be true if home prices fall: your assessed value might still reflect the old higher prices until the next reassessment. This lag or cap causes effective tax rates (tax paid divided by market value) to vary greatly among owners. Indeed, long-time owners often benefit from lower effective rates compared to new buyers. Real-Life Figures According to surveys, the typical U.S. homeowner’s property tax bill is about $2,375 per year (as of 2024). But this average masks huge variations. In New Jersey, for instance, the median homeowner paid about $8,362 16

• reflecting both high home prices and high tax rates there. These numbers illustrate that

both market prices and assessment/tax policies affect your bill.

Next steps

• Use the Property Tax Estimator to sanity-check your bill.
• If something looks off, run a quick Appeal Savings scenario.
• Scan the Articles list for related topics like exemptions, deadlines, and escrow planning.