“In 2005 I bought a house in PB worth $700K. …I just received the property appraisal from the tax assessor and the current value of my house is now down to $488K…”
Let me stop you right there.
The tax assessor’s assessment of your Pacific Beach home is not necessarily the value. In fact, I’d be surprised if it was.
Your assessment is figured this way:
1. The year you buy your home, it’s assessed at the price you paid (exception: if the assessor feels you grossly over- or underpaid, they’ll assess it at what they think it’s worth.)
2. After you buy, your assessment is raised if you do any additions or large improvements they know about. They find out when you apply for a permit. So if you do work that doesn’t need a permit, it won’t impact your assessment.
3. Other than #2, your assessment can only be raised 2% per year due to Proposition 13. (See exception in #5)
4. If your home value falls you get a consolation prize: the assessor may decrease your assessment. This is what happened to you. But their new value is not necessarily accurate. NOTE: they may lower your assessment or you may need to contact them to get it lowered.
5. If an assessment is decreased as in #4, when values turn up the assessor may increase your assessment. They can increase it by more than 2% per year until they “catch up” with what your assessment would have been if they’d never lowered it and continued to increase it by 2% per year.
With the San Diego Tax Assessor evaluating hundreds of thousands of properties, they are not always accurate.
It’s complicated, but that’s how it works.