In the last six months the assessor's office had already reduced the assessed value of 1,299 properties in Cupertino for a total reduction of $277 million.

As a result, these residential property owners will see a decrease in their property taxes. "While this temporary reduction in assessed value may appear to be good news for property owners who are impacted, it is particularly stressful for homeowners when the value of their home, which for most families is their single most valuable asset, declines," said Stone.

Property owners who bought a house in 1999, 2000 or 2001 have been affected the most, he said. "Chances are most of those properties are worth a lot less."

The assessed value of business personal property (machinery, equipment and computers) has declined by 10 percent in the county, contributing to the loss in total assessed property value.

Almost 60 percent of this reduction can be accounted for by a stagnant market for technology products. According to Stone, the value of business personal property has declined by $1.5 billion in the county.

"The drop in value in commercial and industrial properties has been unprecedented, and it has occurred virtually overnight," said Stone.

With companies closing shop all over the county, commercial property owners are facing a decline in assessed value as well.

"There is 60 million square feet of vacant space in Silicon Valley. The value of commercial property is based upon its usage," said Stone.

In spite of overall property values dropping, Cupertino's total assessed value of all real and business personal property grew by 6 percent. That's due to real estate transactions that raise assessed property values and generate more property taxes. Also, the remaining properties experienced a 2 percent increase in property value in accordance with Proposition 13.

"It's just like a marketplace. Some properties went up in values; some went down," said David Ginsborg, director of special programs and external affairs in the county assessor's office.

Since the state depends on property taxes for funding schools and police and fire departments, the low property values will have an effect on these services in the coming years, said Stone.

As the Fremont Union High School District and the Cupertino Union School District are both basic aid districts that rely on property tax income, these districts will see a decline in income for the coming fiscal year.