The equalization rate is calculated based on supposed sales in the municipality during the past year.

But it is more or less an average of sorts.  It is determined based on the sale prices of all properties, regardless of residential or commercial.  Some properties might sell for higher than the assessed value, others sell for far below assessed value.  The equalization rate does NOT make a distinction between neighborhood for example.

But one thing for certain is that a city with an equalization rate of 123% means that typically -- that is TYPICALLY -- the assessed values are 23% higher than the typical market value of the properties.  Essentially, the city is over-assessed.  

In 2011 (after property values started falling in the "real estate crisis", the equalization rate for the city was 100% in other words, the assessed values were equal to the market values, meaning houses sold in 2010 for 100% of market value.

In 2012, the city's equalization rate increased to 104% meaning property values typically fell 4% during 2011 (i.e, the sales prices in 2011 were 4% lower than prices in 2010)..

In 2013, the city's equalization rate increased to 108% meaning property values typically fell 8% during 2012 (i.e, the sales prices in 2012 were 8% lower than prices in 2010).

Now here we are In 2014, the city's equalization rate increased to 123% meaning property values typically fell 23% during 2013 (i.e, the sales prices in 2013 were 23% lower than prices in 2010).



Note that the comparison is always as compared to 2010 when, in theory, the assessed value and the market value were equlal.  In other words, if the city has a house assessed for $100,000 in 2010, then it sold for $100,000 in 2010, and in theory that same house would have sold for just over $81,000 during 2013.

However, remember that the equalization rate makes no distinction between residential vs commercial, no reference to neighborhoods, no reference to "comparables," etc.  So the equalization rate is a rough number set by the state and it really doesn't not reflect the real market value of houses.  You only need to look at the facts.  You may see a slew of houses that sell for $50,000 but they are assessed for $90,000.  With an equalization rate of 123%, the city would simply multiply the $90,000 assessed value by roughly .0813 and would claim that the market value of those houses is $73,000 even though no buyers were willing to buy the houses when offered at 70,000, nor when asking prices were reduced to $65,000, etc. but if buyers finally were willing to buy when the sellers were asking $50,000, and that's the price they were purchased for, then that $50,000 I really the true market value of the house.

So it's necessary to get the sales prices of comps in order to determine YOUR approximate market value and then multiply that approximate market value by 1.23% to come up with a proper assessment value.