It wasn’t all that common during the last downturn because the assessments weren’t large enough to warrant chasing the 20% reduction in taxes. That was when homes were selling for 1/3 of what did at this last peak.
Roughly speaking, if a home that was purchased new in 2005 for $900k is generating about $10,080 in annual property taxes (which includes several types of assessments in addition to the base), a 20% reduction in the base tax rate would net about $1,800/year or so in tax savings between the time it was reduced and the time the market value returns to the original level. Unlike with the Proposition 13 limitations of 2% annual caps, if a County Assessor reduces a tax assessment because of market conditions they can adjust it back in however little time it takes for the market to recover. After it gets back to the original value, that’s when the 2% annual cap takes over again.
To get the reduction, the property owner would need to file the appeal. If the tax assessor disputes it the matter will go to an appeals hearing. At that point the property owner can bring the data they think supports their case and the assessor will do the same. Obviously as an appraiser I’d tell you to get an appraisal to document the comps and provide the outside opinion of value, but it’s my understanding that an appraisal is not necessary, per se.
In order to decide if it’s something you’d want to do, you’d have to consider the costs involved in getting an appraisal and perhaps hiring a consultant to argue your case for you, as well as your own time and effort. The thing to remember is that the reduction is temporary and only lasts as long as the market value of the property is below its prior assessment. As an example, a 20% reduction on the $900k home that lasts for 2 years would gross a savings of $3,600 before considering the costs to obtain that reduction. And this is assuming the market doesn’t come roaring back next year.
When homes were commonly selling for $150k-$300k the property tax savings were generally not enough to justify the appeal. But that was then and this is now.