While home values are falling aboveboard, property taxes are still at a steep rate. Starting in January tax authorities will be sending out 2009 property assessments to inform homeowners of the estimated value of their property and what their tax bill will be. However, none of this will take into account the decline in home prices seen this past year. The president of the American Homeowners foundation, Bruce Hahn, said that "I think you're going to see a lot more taxpayer protest this year,".

Previously when the home prices rose, property taxes climbed as well. For this year, it is likely that Americans will pay over $400 billion in property taxes, 25% more then in 2004 and double the amount paid 10 years ago. According to Pete Sepp, a spokesman for the National Tax Payers Union, those high increases may level off, but at a gradual rate. Of course this does nothing for homeowners, who want to see lower tax assessments now. Ken Wilkinson, a tax assessor in Lee County, FL, estimated that over 80% of his county residents had a decline in home value. Based on data from the Housing Opportunity Index complied by Wells Fargo for the Nat. Association of Home Builders, the median price of existing homes dropped 25% in the 12 month period ending June 30th.

The problem is that there can be a huge gap in time from when home sales are used to calculate assessments and when the assessments are issued. For example, to calculate 2009 assessments, normally the home sale prices from 2008 or prior to that, would be used. In the past this was better for the homeowners as it takes time for price increases to start to be reflected in the assessment due to the issuing time frame, but this year is a definite throw back.

Another huge problem is that in many states, such as California, Idaho, Massachusetts, and Washington, taxes are based on the last resale price of each home, which of course was better when the market was more healthy. While homeowners can fight for reassessment it is not likely that their property tax bill will lower. Tax collectors normally raise rates to offset lower assessments and meet their budgets. According to Hahn, "State and local governments depend very heavily on real estate taxes and they are reeling from a loss of revenues from sales taxes and other sources,". Those who do feel they have issue to contest their assessment, will have several weeks to do so and Hahn recommends that they use evaluation sites like Trulia or Zillow to determine how much property values in their area have fallen, and use this and home sales of similar properties to assist in their cases.