Example of how property values are assessed :

Proposition 13 (prop 13) puts a cap on the rise in a property's assessed value. Under Prop 13 the assessed value can't rise now more than 2% a year, unless the market value of a property falls lower than the assessed value. If this happens, Proposition 8 (prop 8) allows for a temporary reassessment to the lower of assessed value or the market value. 

However if the market value rises, it can rise more than 2% up to the Prop 13 assessed value.