California prop 13: base is purchase price, every year increase

every year increase 2% at most, but if market tanks, they might give you a lower assessment if it is below your x * 1.02^n, but when market recovers it will recover to x*1.02^n, compared with prev year the diff can be more than 2%.

 

eg

100k purchase 2007

2008 market price is 50k, so they may lower to 50k assessment

Then 2013 market recover, you bought 6 years, so the max you can be assessed is

100* 1.02^6 = 112k (approx)