The Golden State officially isn’t worth what it was a year ago.
Tax officials reported Tuesday that total statewide property values fell by 2.4% in the latest fiscal year, the first such drop since California began keeping records 76 years ago in the depths of the Great Depression.
The drop results from county tax assessors across the state hustling to lower the values of residential, commercial and industrial properties to reflect damage wrought by the deepest national recession since World War II.
As of June 30, the assessed value of all taxable property in California was $4.448 trillion, down $107.2 billion from a year earlier. The loss means less money and more misery for already strapped state, local and school district treasuries.
Essential public health and safety programs are facing more budget cuts and personnel layoffs, while schools probably will pack more children into each classroom, tax collectors warn.
“It’s pretty astounding. This is something we haven’t been through before,” said Howard Roth, the chief economist at the state Department of Finance. “This will hurt and have a lagging effect on revenues” that could last years.
Thirty-eight of California’s 58 counties suffered year-to-year declines, with 14 counties posting drops of 5% or more, the state Board of Equalization reported.
Southern California values dropped by an average of 2.5%, close to the statewide average. The damage ranged from a decline of 0.6% in Los Angeles County to a decrease of 10.5% in Riverside County.
Regionally, the Central Valley, which experienced a housing construction and sales boom early in the decade as coastal residents sought affordable mortgages, was the hardest hit by the collapsing market. Assessed values fell 9.9% in the northern San Joaquin Valley, 4.8% in greater Sacramento and 4.2% in the southern San Joaquin Valley.
San Francisco was the only highly urban county to show a significant increase in real estate values, 7.1%.
Historically, increasing property values always have been taken for granted in California, a state that for decades has welcomed new residents from across the country and across the world, said Betty Yee, chairwoman of the Board of Equalization, the agency charged with keeping track of real estate tax revenues.
But California can’t count on a natural rebound in housing construction and consumer spending as it did in previous recessions, such as the military-base-closure crisis of the early 1990s and the high-tech bust in 2000-01, Yee said.
The slight rise in housing sales this summer is a hopeful sign but won’t do much to boost tax revenues because homes are “being sold for much less,” Yee said.
In past tough times, Ventura County always managed to post some growth because of sales of higher-priced older properties, Deputy Assessor Huiling Tanouye said.
Her office has reviewed and lowered tax rates on 65,000 out of 90,000 parcels in the last year.
That’s about 25% of the county’s tax roll, Tanouye said. In the meantime, homeowners who think their assessed values are still too high are filing appeals at triple the rate of last year, she said.
“We hear from people who are in dire straits, and they will vent their frustrations to our staff,” Tanouye said. “We are here to listen, but we can’t control what’s going on.”
Foreclosures, she added, are pushing down assessed values even more in poorer parts of the county like Oxnard.
Bank-owned houses, some of which are being sold for as little as a third of their value compared with a few years ago, drive down government revenues because tax bills are recalculated based on the sale price when a property changes hands.
Although the first-ever statewide drop in property values is eye-opening, it shouldn’t be overly alarming, said John Husing, an independent analyst with Economics and Politics Inc. in Redlands.
“Everything was too overpriced, inflated beyond what the market could afford, and so now we’re getting back to reality, now we’re readjusting to the market,” Husing said. “Supply is answering demand again.”
He placed much of the blame for the busted housing market on speculators and mortgage companies, which rushed to put people into loans they couldn’t afford.
“A lot of people wanted houses and there weren’t a lot of houses to be had, so prices went up because we had a shortage,” Husing said. “So all these speculators were diving into the market, buying houses not to live in but to flip them.”
When the economy turned sour, the new homeowners “left the keys on the table and walked away from their homes, and that resulted in the foreclosure crisis,” he said.
Times staff writers Catherine Saillant, David Kelly and Garrett Therolf contributed to this report.