Homeowners, like Jennifer Haag, can't wait to see their new tax bill because it could be smaller this year.
"I'm a stay-at-home mom. I'm the one who is in charge of the money, and I have to squeeze every dollar as much as possible. So my immediate reaction was, 'Right on!'" said Haag.
In the Southland, Los Angeles County fared the best, with assessed values down less than 1 percent. Orange County fell 1.4 percent and Ventura County fell 2.4 percent. In San Bernardino County, the drop was 6 percent and Riverside County fell 10.5 percent.
While lower assessed values are good for the wallet, they mean more misery for local governments because things like public safety and other services won't get as much money.
"It means they're going to have to do further cutbacks in their staff, more furloughs, more reductions in hours of libraries and recreation centers, not maintain public buildings, not maintain streets," said Chris McKenzie, League of California Cities.
Public schools will also receive less funding. One-third of their budget comes from property taxes, with the state making up any loss.
"There is an obligation, normally, to backfill the loss of any property taxes. But in this budget dynamic, the state doesn't have any money ... they're broke," said Kevin Gordon, a public schools lobbyist.
Proposition 13 limits how much an assessed value can go up each year to 2 percent. So it will take years for local governments and schools to see funding levels go back to normal.
"If the real market doesn't return quickly, then property taxes won't return as quickly; and these cutbacks are going to have to be sustained even longer," said McKenzie.
California's slight increase in housing sales this summer will not help boost tax revenue because prices are much lower.