So, here's what went down last month. I was working with our operations team on a project to teach people about homeownership. People who were looking over their tax assessments kept asking me the same question: "Wait, my tax assessment says my house is worth $320,000, but I know for a fact that homes like mine on my street just sold for $380,000." What's going on?
I'll make this easier for you. There are two price tags on your home, and they mean different things. One tells the government how much tax you owe, and the other tells buyers how much they will actually pay.
Your local government uses the assessed value to figure out how much you owe in property taxes each year. On a personal level, your city, county, or township needs to pay for schools, fire departments, roads, and all the other things that make your neighborhood a good place to live. Most of that is paid for by property taxes.
Local tax assessors figure out how much your home is worth by using mass appraisal methods. The Tax Foundation's 2025 property tax analysis said that property taxes made up 70.2% of all local tax collections in fiscal year 2022. That's a lot; it's no surprise that assessors take this seriously.
This is how the math really works (and I promise it's easier than it sounds):
If your home is worth $250,000 and your local property tax rate is $12.50 for every $1,000 of assessed value, your annual property tax bill would be: $250,000 ÷ $1,000 = 250 250 × $12.50 = $3,125 per year
The standard answer is that assessors look at similar sales and property features. But in reality, most places use computerized mass appraisal systems that look at thousands of properties at once to quickly figure out their assessed values.
Market value, also known as fair market value, is the price that a buyer and seller agree on in an open market. This is the number you will see in real life when you buy or sell your home.
I learned that market value changes all the time based on current conditions when we got this process understanding through our project management work. According to HUD's 2025 FHA appraisal guidelines (which you can read here), appraisers look at comparable sales, the condition of the property, the location, and current market trends to figure out the market value.
Market value considers factors that assessed value often misses:
Think of it like this: assessed value looks backward using standardized formulas, while market value looks at what's happening right now in your specific market.
In my Master’s of Social Work (MSW) program, we learned about how systems thinking applies to community resources and support structures. Property valuation works similarly – multiple systems operating with different goals rarely produce identical outputs.
The first big difference is the time gap. Most places don't check on properties again every year. According to research from the MOST Policy Initiative, 37 states currently assess property at least once every three years, and 27 of those states do so every year. That means that 10 states don't check in on their progress for more than three years.
Some counties in Pennsylvania haven't done reassessments since the early 1970s or 1980s. This has caused huge differences between the assessed value and the market value. In fast-growing markets, on the other hand, a home's market value could go up by $50,000 in a single year, but the assessed value stays the same until the next reassessment cycle.
Different places have different assessment ratios. Many places value property at a percentage of its market value. As a matter of policy, your county might assess residential property at 85% of its market value. If your home is worth $300,000 on the market, the assessor might set its value at $255,000 (85% of market value).
Because of the limitations of mass appraisal, assessors miss important details. When assessors use computerized models to look at thousands of properties, they look at things like square footage, number of bedrooms, lot size, and age. They can't take into account every custom feature, recent upgrade, or problem with the condition that could affect the market value.
According to Maryland's 2025 reassessment data released by the state Department of Assessments and Taxation, the overall statewide value increase for Group 1 properties was 20.1% over the three years since the last reassessment, with 96.9% of residential properties seeing increases. That's a massive shift that demonstrates how market values can surge between reassessment cycles.
Let me walk you through the real process assessors use, because understanding this helps you identify potential errors.
Most counties use Computer-Assisted Mass Appraisal (CAMA) systems that evaluate thousands of properties simultaneously. The assessor's office inputs data about your property:
The software then applies market data from recent sales to develop valuation models for different neighborhoods and property types.
Real-world example from 2025 assessment data:
Fairfax County, Virginia reported in their 2025 assessment that the mean assessed value for all improved residential property reached approximately $794,235. Individual property changes varied considerably – single-family detached homes increased 6.38% while townhouse/duplex properties rose 6.53%.
Notice how they specified "mean" rather than average? That's because assessors think in statistical terms when valuing thousands of properties at once.
Your assessed value won't typically change unless one of these events occurs:
Maryland uses a phase-in system that deserves attention because it shows how government tries to balance accurate assessments with homeowner protection. According to the Conduit Street analysis of Maryland's 2025 reassessment, when a property value increases after reassessment, the increase is phased in equally over the next three years. However, any decrease in value gets fully implemented immediately in the first tax year.
What this means for you: If your assessed value jumps from $300,000 to $360,000, you won't immediately pay taxes on the full $60,000 increase. Instead, you'll see a $20,000 increase each year for three years. But if your value drops from $300,000 to $270,000, you get the full tax relief immediately.
This is where market value becomes very important for your financial success.
Market value decides a lot of important things when you buy a home:
Negotiating the price of a home: Your real estate agent uses comparable sales (comps) to back up their offer prices. HUD's FHA appraisal requirements (as of November 2025) say that appraisers must look at comparable sales and current market data to figure out the market value for the lender's protection.
Let's go through a real-life example:
You want to buy a three-bedroom, two-bathroom house that costs $295,000. Your agent looks at other homes and finds:
The trend shows that values are going up by about $4,000 a month. Your agent might tell you to offer between $288,000 and $292,000 based on this market value data. However, the assessed value for tax purposes might still be $265,000 from the last reassessment two years ago.
Most mortgage contracts have an appraisal contingency that protects you in case the appraisal comes back lower than the amount you owe. If the appraiser says the market value is $280,000 but you agreed to pay $295,000, you can usually renegotiate or walk away without losing your earnest money.
Calculating your down payment: Your lender will give you a loan based on the lower of the purchase price or the appraised market value. If you want to buy a house for $300,000 but it only appraises for $285,000, you'll have to either lower the price or bring more money to the closing.
According to King County, Washington's property tax data for 2025, the total value of all county properties went up by about 4.8%, from $833 billion in 2024 to $873 billion in 2025. After big and historic changes in the housing market earlier in the decade, prices have returned to more normal growth rates.
This kind of market stabilization changes how much buyers are willing to pay. We talked about how housing markets work in cycles when I was in class learning about economic systems and community stability. A lot of markets are going through this normalization right now after the surge caused by the pandemic.
Okay, this is where it gets really interesting, and if you're not careful about where you buy, it could cost you a lot of money.
The Tax Foundation's 2025 analysis of property taxes by state and county shows that New Jersey has the highest effective property tax rate, followed by Illinois and Connecticut.
The original analysis used WalletHub data to show that the average U.S. homeowner pays $2,375 a year in property taxes, but the median New Jersey homeowner pays $8,362 a year. That is more than three and a half times the national average.
If you buy a $400,000 home in New Jersey with their average effective rate, you might pay $400,000 × 2.09% (the average effective rate), which is about $8,360 a year. That's $696.67 a month just for property taxes.
In Alabama, on the other hand, the rates are much lower: $400,000 × 0.41% (approximate effective rate) = $1,640 per year.
That's $136.67 a month, which is $560 less a month.
Because they don't have state income taxes, New Hampshire and Texas both rely a lot on property taxes. The Tax Foundation says that this often means "giving more power to local governments, which are in charge of more government services than they are in states that rely more on state-level revenues like income or sales taxes."
What this means for you is that if you live in a state that doesn't have an income tax, your property tax bill usually goes up to make up for it. You're not necessarily paying less overall; the government is just collecting money through property taxes instead of income taxes.
The data from 2025 shows big differences between regions:
Most homeowners don't know they can appeal their assessments, or they think it's too hard to bother. But if your assessment is really wrong, you might be paying hundreds or thousands of dollars too much every year.
You can appeal if you have a good reason to do so.
Fairfax County, Virginia's 2025 assessment notice guidance says that property owners should call the Department of Tax Administration with questions before filing an appeal. This casual talk often solves problems without going to court.
First, look for mistakes in the facts. These are the easiest to fix. Wrong area? Wrong number of bathrooms? Things on the list that you don't have? Take pictures and measurements of everything and write it down.
Get the most recent sales data for homes in your area that are similar to yours. You can usually find the assessed values of any property on the website of your county assessor. You need at least three to five good comparables that sold in the last six to twelve months.
Look up when your local jurisdiction requires you to file an appeal. If you miss the deadline, you'll have to keep your assessment for another cycle, which could cost you thousands.
It matters how you organize yourself when you file an informal administrative appeal or go before a Board of Equalization. The state Board of Equalization says that these boards hold formal hearings and listen to sworn testimony. So, act like you're giving a business presentation.
From the point of view of project management, successful appeals have some things in common:
The book answer is that regular reassessments make the distribution of property taxes more fair and accurate. But the number of times your state reassesses your property has a big effect on how stable and fair your property taxes are.
According to research by the MOST Policy Initiative on property tax assessment limits, 27 states assess property every year, while others use longer cycles. The results are very important:
What no one tells you is that when reassessments happen only once in a while, they can be very shocking when they do happen.
New York State's reassessment guidance says that some properties become over-assessed and others become under-assessed after not being reassessed for a few years. This is because market values change at different rates in different neighborhoods. If properties aren't reassessed, properties that went up a lot in value get a sort of subsidy from properties that didn't go up as much.
The Maryland 2025 data shows this perfectly: Group 1 properties went up an average of 20.1% after three years without being reassessed. That's a big jump that hurts homeowners a lot more than if those increases had been spread out over three annual 6.7% increases.
The Homestead Tax Credit program in Maryland is an interesting example of how to protect taxpayers. The Maryland Department of Assessments says that this credit limits the yearly rise in taxable home values in every Maryland county. This "ensures that property tax burdens do not rise too quickly, regardless of market conditions."
The Conduit Street study says that when property values in Maryland go up after a reassessment, the increases happen at the same time over three years. If your assessed value goes up by $60,000, from $300,000 to $360,000, you'll see:
But keep in mind that you get the full decrease right away if your value goes down.
According to data from the MOST Policy Initiative, California's Proposition 13 offers even more protection by limiting assessment increases to a maximum of 2% per year for all property. The value of a homestead in Florida can only go up by 3% a year.
Here's the human side of assessment caps: they can be very unfair to people who have lived in a place for a long time and people who are buying a home.
The New York reassessment guidance example says that when Maria bought her house in Westchester County for $800,000, it was still worth $500,000 from years before. If her village doesn't do regular reassessments, she pays taxes on the $500,000 assessment instead of the $800,000 purchase price. This is like getting a tax break.
But this makes it harder for properties that are newer and less valuable. The MOST Policy Initiative's research shows that less frequent assessments "create a greater tax burden on newer and lower-value properties" and "unexpected increases in tax bills when properties are reassessed."
When you get a loan for your home through AmeriSave, we explain how both the assessed and market values affect your deal. We check the appraisal results to make sure you're not paying too much, and we can show you how property taxes will affect your monthly housing costs through your escrow account.
These numbers help us set up your loan the right way and make sure you're ready for all the costs that come with owning a home, not just your mortgage payment.
Let me make this easier for you: It's important to keep both values in mind, whether you're buying your first home or refinancing your current mortgage.
When you're looking for a home, think about its market value. How much do homes like yours really sell for? Don't let low assessed values get you down; those are just numbers from the tax department, not what you'll actually pay.
The appraisal tells your lender what the market value is after you make an offer. You'll have to negotiate again or bring more money if it comes in low. AmeriSave can help you figure out what to do if you have an appraisal gap.
The assessed value is important now that the sale is over because it shows you how much of your monthly PITI payment (Principal, Interest, Taxes, and Insurance) goes toward property taxes. Every month, your lender will take 1/12 of your yearly property taxes and put them in an escrow account.
As a homeowner, you should check both values every year. If your market value goes up a lot but your assessed value stays the same, you're building equity faster than your taxes are going up. This is the best possible outcome. If the value of your property goes up more than its real market value, you may be paying too much in taxes. You might want to think about appealing.
In the end, it's all about being aware of what's going on. I know how frustrating it is when these two numbers don't match. It makes the system look random or unfair. But you have power when you know what makes them different and how each one affects you.
The market value of a house tells you how much you should pay for it and how much you should get when you sell it. The market is always changing because of how things are going right now. When your local government does a reassessment, it only changes the value of your property. Your yearly property tax bill is based on this.
Both of them are fine; they're just measuring different things for different reasons. Problems happen when assessments don't keep up with changes in the market, when the assessor doesn't have the right information about your property, or when you don't know how to use each value to make a choice.
Customers never tell you this: they don't really look at their property tax assessments until they get a big bill and are already stressed out. Don't do that. Check your assessment notice every year to find out when your local reassessment will take place. Don't be afraid to appeal if you have a good reason.
When you're ready to buy or refinance, AmeriSave's mortgage experts can help you figure out how property taxes fit into your overall housing budget and long-term financial goals.
No, these are two very different things. Government appraisers use mass appraisal methods to figure out how much property taxes are owed on thousands of homes. According to HUD's 2025 appraisal guidelines, a HUD-approved appraiser does a home appraisal to find out how much the home is worth on the current market for lenders. Your lender won't accept one instead of the other because a tax assessment and an appraisal are very different. Tax assessments use standard formulas, but appraisals need to look at each property in detail. The assessment sets the taxes, and the appraisal protects the lender's money by making sure the property is worth what it says it is.
Yes, they have an effect on each other, but not always in a clear way. When assessors do reassessments, they look at recent sales on the market because the prices of actual sales are the best way to show how much something is worth. If a house sells for a lot more than it was worth, that usually means that the next round of assessments will show that the house is worth more. Real estate agents also think about how much the homes are worth when they set prices. In 2025, data from a number of places show that if these values are very different from each other, it means that either a reassessment cycle is overdue or the market is changing quickly in that area. The biggest difference between these numbers is that it takes time for changes in market value to show up in assessments.
This will depend on the laws in your state and city. The MOST Policy Initiative's research shows that 27 states give tests every year, but some do them less often. Every four years, Illinois needs to be looked at again. But in Cook County, it happens every three years. In Missouri, Colorado, and Montana, reassessments only happen once every two years. In the 1970s or 1980s, some counties in Pennsylvania did full reassessments for the last time. But people check out homes that are being built right now. If you get a permit for big changes to your property, win an appeal, or cause a lot of damage to it, your assessed value can change outside of the normal cycles.
Yes, for sure. People in every state can challenge assessed values through administrative appeals, boards of equalization, and court cases. Several jurisdictions' 2025 guidelines say you have a strong case. If the assessor makes mistakes about your property, your assessment is higher than the fair market value shown by comparable sales, or similar properties are assessed much lower. Get good proof and turn it in on time. In Virginia, you have until April 1 to file an appeal. You have 45 days from the day you get your notice in Maryland to do this. Many places want you to do a casual review first. You can't just say that taxes are too high and expect to win because assessors only care about how close the assessed value is to the market value.
Not all the time. The New York State reassessment materials say that the amount of tax you owe depends on both the assessed value and the tax rate. When the value of all properties goes up, the tax rates usually go down by the same amount. This is because the tax is based on a larger amount of assessed value. Your taxes might go down if your assessment goes up less than the average. If your assessment goes up by 10% but the average increase is 15%, you'll pay less because your share of the total tax burden has gone down. When assessments go up a lot, tax rates should go down. But only if the government doesn't raise the total amount of taxes. Not just your own assessment, but also the rate and the levy.
There will be some differences, but one big one needs to be looked into. When there aren't a lot of reassessments in a certain area, gaps happen naturally because the market value changes but the assessed value stays the same. Some states choose to base property taxes on a percentage of the market value. The 2025 assessment for New York City shows the same thing as usual: the city's market value was $1.579 trillion, but the assessed value was only $311.2 billion. You can get a tax break if your assessed value is a lot lower than the market value. If the assessed value is a lot higher than the market value, you might be paying too much. You should check to see if other homes like yours have lower assessments or if you have a good reason to appeal.
Most banks want you to pay your property taxes through an account that holds money for you. PITI is short for Principal, Interest, Taxes, and Insurance. In other words, 1/12 of your yearly tax bill is added to your monthly mortgage payment. Your lender uses the current assessed value and rates to figure out how much you owe in property taxes each year. Then, they split that amount into twelve parts and add it to your monthly loan payment. When the bills are due, the lender pays the taxes directly to the taxing authority. If your property taxes go up after a reassessment, your lender will change how much you pay each month. Your total payment will go up, but the amount you pay on your loan will stay the same. For example, if you pay $3,125 in taxes each year, your lender will take about $260 out of your escrow account each month. Your total payment will go up by $53 if your taxes go up to $3,750 and your monthly escrow goes up to $313.
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