Proposition 2½ limits the amount of taxes a community can raise from property tax. The assessment is an estimate of market value. Since real estate market changes are based upon the buyers’ and sellers’ needs, there is no limit to the amount an assessment can increase or decrease.
Assessment changes are always based on the real estate market. For example, if a property sells for $500,000 in calendar year 2017, there is no limit or minimum price it would sell for in calendar year 2018 or beyond. It could sell for $600,000, $700,000, $1,000,000, or $400,000. The sale price would be based on the real estate market at that time. Assessments do not predict market value, they reflect (or report) market value.