After the assessed value of properties in Los Angeles County decreased for the first time since 1996, many homeowners are expected in October to see the largest property tax cut in decades, county Assessor Rick Auerbach said Thursday. Since the housing correction began, Auerbach's office has reassessed the values of hundreds of thousands of homes. With the drop in values, the annual property tax bill for the owner of a single-family residence is expected to drop an average of $1,400 this year. The owner of a condominium will see property taxes drop an average of $1,100. While that helps taxpayers in this battered economy, it represents another hit for government agencies and schools that rely on property taxes to help fund services and programs. Auerbach said property taxes have not dropped this much since voters approved the tax-limiting measure Proposition 13 in 1978. 'Many people are surprised they are going to get a reduction in their property tax bill from last year,' Auerbach said. 'The bad news is the value of their home has dropped, but most people already knew that.' The drop in how much homeowners pay in property taxes is the result of a decline-in-value review conducted by Auerbach's office. Of 473,000 homes reviewed, the assessments on 334,000 single-family residences and condominiums were lowered. Since the housing market peaked in February 2007, the median price of a home in the county has dropped in half from $616,200 to $313,300, said Jack Kyser, chief economist at the county's Economic Development Corporation. 'It's bad news for government agencies that operate on property taxes, but it's good news for homeowners,' Kyser said. 'It means they will pay less on their property taxes and will probably use the money for other purposes. A lot of people will heave a sigh of relief.' Ana Maria Colon, president of the Southland Regional Association of Realtors, said the reduction is great news for homeowners and those interested in buying a home. 'It makes the homes more affordable,' Colon said. 'In my 37 years of selling real estate, this is something I've never experienced before. I've never seen that big of a drop.' Government officials had already budgeted a sharp drop in overall revenue this year. And an official in the county Chief Executive Office said the drop in property tax revenue was actually less than expected. Sid Kikkawa, a senior manager in the CEO's office, said the county had expected property tax revenues to drop 1.06 percent this year, but instead the drop is only 0.52 percent. This means the county will gain back $13.4 million of the property tax revenue it thought it would lose. 'I think this is going to have a minimal impact on county services,' Kikkawa said. 'It's good news for homeowners and neutral news for us at this point. 'But I think some caution needs to (be) given. There are still many factors for the county's budget that are uncertain -- the state budget, the economy and where we'll close for the year. Those things are still outstanding, and we'll revisit them in September.' The reduction in property taxes comes as the total assessed value of all property in the county, commercial and residential, dropped by 0.09 percent, or $1 billion, to reach $1.1 trillion, according to Auerbach's annual report. The drop in overall values follows 12 years of consecutive increases in assessed values of residential and commercial properties. The real estate slump of the mid-1990s was reflected in the last decreases in the assessed value of properties with a 1.7 percent decline in 1995 and a 0.2 percent drop in 1996. Since then, the assessed value of properties has increased an average of 7 percent annually. 'But this year, for the third time in the last 30 or so years, we've had a reduction in the assessment roll, although it's a minor reduction,' Auerbach said. 'Clearly, it's because of the real estate recession. But because of Prop. 13, there is a moderating effect in the reductions.' Among the cities with the largest drops in assessed values were Lancaster at 15.4 percent, Palmdale at 14.9 percent, Santa Clarita at 5.1 percent and Los Angeles at 0.1 percent. The cities with the largest increases in assessed values included Malibu at 6.9 percent, Beverly Hills at 6.1 percent and West Hollywood at 4.4 percent. The county had 41,268 foreclosures last year -- or 1.8 percent of all properties in the county -- up from 14,995 in 2007. The number of foreclosures was higher than every year since 1995, when 32,207 foreclosures were reported. But some experts think after the price of homes has dropped in half in a few years, the county's housing market has neared its bottom. 'The number of buyers out there looking for a bargain is growing,' Colon said. 'Ultimately, the sellers are selling for more than the listed price in most instances, but these are still very good prices.' William Roberts, director of the San Fernando Valley Economic Research Center at California State University, Northridge, agreed the housing markets appears to have 'bottomed out.' 'It's stabilized now and people are waiting to see when the recovery really starts and when unemployment stops going up,' Roberts said. 