COEUR d'ALENE - Property values in Kootenai County have taken another hit.

The county Assessor's Office mailed out 85,691 assessment notices to property owners on Tuesday, said Assessor Mike McDowell.

The overall assessed value of the county fell to $12.6 billion for 2010 - a $2.1 billion drop from the year before, according to analysis of housing sales and other market activity in the county throughout 2009.

This is in step with a recent downward pattern, as the county's overall net taxable value plummeted $1.2 billion in 2009 and also dropped $.72 billion in 2008.

"A lot of it is the general economy," McDowell said of the reduced value, which largely reflects a sluggish real estate market and slashed property prices in the area. "You've got layoffs; there are fewer folks able to make those (housing) purchases. Certainly in our area the higher (priced) properties have been significantly impacted."

But McDowell isn't worried.

This decline is just a return to normal market levels, he said, after the dramatic spike from 2005 to 2007, when new construction was rampant in the area.

The county's assessed value peaked in 2007 at $16.5 billion.

"In retrospect, those values reflected high points, but a lot of that may have been because of market frenzy," the assessor said. "Now the market is being brought back to a level supported by normal wage levels."

The 2010 assessed value would still be in line with the 3 to 4 percent value increases the county reported annually for more than 10 years prior to the surge, he said.

"The real estate market is still stable," McDowell said.

Most individuals will see their housing values drop 5 to 10 percent, he said, adding that the greatest reductions were in pockets across the county where over-construction was high.

Land values will drop even more than building values, he added.

Primary homeowners will see a decrease in their homeowner's exception from $104,471 in 2009 to $101,153 for 2010.

Many home sales in 2009 were under special circumstances like foreclosures, McDowell said.

Mike Threadgill, Realtor and co-owner at Keller Williams Realty in Coeur d'Alene, said he would compare current property prices to those in 2001.

"I feel like we're back at a normal pace," Threadgill said. "I think financing has a little bit to do with it. Prices for a short number of years were over-inflated, and the market corrected them back to a more affordable price line."

The market may have even over-corrected, he said, as he sees homes selling cheaper than it would cost to build a new house.

The rising amount of foreclosures and short sales further devalues properties, he added.

"It's a great time to buy, with low interest rates and a lot of homes on the market to choose from," Threadgill said. "Anybody that has the potential of buying should be a homeowner and not a renter at this stage in the game."

Property assessments for 2010 are based off local property sales, as well as other market information like asking prices, that occurred only in the 2009 calendar year.

But here's an important note for property owners: Drops in property values don't guarantee that property taxes will fall, too.

Property taxes are determined both by property values and levies set by local taxing districts.

"The ultimate value of the county is less than what it was a year ago. That in itself will drive levy rates up," McDowell said.

Most taxing districts are deciding their budgets now, McDowell said, and the dates and times of their budget hearings will be included on all assessment notices.

"People need to pay attention to that," he said. "If they're concerned about their property taxes, they need to pay attention to people setting these budgets."

Property owners can contest the assessed values by contacting the Assessor's Office at 446-1500 or via e-mail at kcassr@kcgov.us.

They can also drop by the Assessor's Office in the county Administration Building at 451 Government Way.

McDowell reminded that any information about current assessment values must be from 2009, as all 2010 figures will be reflected in 2011 assessments.

"This is an open-ended discovery process for us," he said. "We're open to looking at this."