Santa Clara County may be about to experience one of its worst declines in property value in 15 years.

New data from the Santa Clara County assessor's office shows a significant number of properties declining in value from 2,595 last year to 19,325 this year. Aside from a brief uptick in 2020 during the first year of the COVID-19 pandemic, this is the first time the county has seen such a large decline since the financial crisis of 2008, County Assessor Larry Stone told San Jose Spotlight.

"The local economy and real estate markets have largely for the last nine years, (except during) the COVID year, been strong," Stone said, who's been the county assessor for 29 years. "I don't think economically the Fed's definition of a recession is in existence yet ... (but this year) has a very strong opportunity to be the worst year in assessment roll growth that we've had."

The sharp increase in the number of properties that have lost value this year equates to a $4.7 billion reduction countywide, which the report largely attributes to residential properties. The number of residential sales in the 2022-23 fiscal year declined by 29% from the year prior, yet the median sale price of a single-family home increased.

Stone said when interest rates go up and inflation occurs, housing values drop. Interest rates are so high, hovering around 8%, that property owners aren't selling because they would be buying at a much higher interest rate, he said. Yet Silicon Valley job growth and incomes have steadily risen, even through COVID, he said.

"The lack of inventory is causing sales prices to stay up and in the last couple of months increase, which is strange," Stone said. "It's different than you'd find in a normal economic situation. Too much money chasing too few homes."

Stone said a continued downward trend has him concerned about the future impact on funding public education -- 51% of all property tax revenue is allocated to school districts. Public schools, along with local governments, are facing the end of COVID stimulus dollars that injected millions into schools.

"Education has not revived itself from COVID," Stone told San Jose Spotlight. "It's been even worse for public education and school kids than it has for industry and individuals. That's the major concern."

As a whole, the value of all real estate and business property in Santa Clara County jumped by nearly $41.2 billion last year, despite a contracting market in the latter half of 2022. That's a 6.6% increase over the prior year.

The report lists the top 10 commercial taxpayers in the county for 2022-23. Among them are Google, which ranked No. 1 paying $117 million in taxes, or 1.5% of its $9.5 billion in assessed property value. Pacific Gas and Electric came in second, paying $86.8 million in taxes. The report shows an unprecedented 9.6% increase of $47 billion in business property value -- second to only Los Angeles County -- driven largely by increased costs of acquisitions and continued inflation.

"That's one of the things that actually moderated the decline in 2022," Stone said. "Our business property (value) was substantially greater than we thought -- it was a surprise ... inflation caused the values of the (business properties) we were assessing to go up."

This story, from Bay City News Service, was originally published by San Jose Spotlight.