CA real estate property taxes are based on the last market valuation of your home that was filed with the county, such as through purchase or refinance. This is the procedure in most of the country. In CA, Proposition 8 allows homeowners to request for a temporary decline in value after a market crash, earthquake, disaster, or any other valid reason.
When home prices rapidly decline, homeowners can appeal to the county tax assessor for a reassessment at fair market value.