The latest city assessments are bringing some unusual news to much of Minneapolis: Home values are dropping.

Drops of $20,000 to $30,000 are not uncommon in middle-class areas of south Minneapolis, where just a few months ago the assessor was expecting values to remain stable.

Although assessor Patrick Todd last fall predicted falling values on the foreclosure-ravaged North Side, some homeowners also report lower assessments in places such as Longfellow, Standish-Ericsson, Kingfield and Fulton. Some have never seen a drop before.

"It was a big surprise to me," said Bill Kahn of Prospect Park, who got news of his 10 percent assessment cut on Saturday. "Usually in this neighborhood it never goes down."

The arrival of assessment notices represents the latest evidence that the sagging home market is having an impact even on those who stay put and aren't surrounded by foreclosures.

Hennepin County Assessor Tom May said suburban residential property is down between 2 and 3 percent.

Ramsey County owners should start to see their notices by midweek.

Some homeowners welcome a falling assessment, in hopes they'll pay lower taxes. Others worry that they're losing equity in their biggest asset.

But the impact of this year's values on next year's taxes isn't clear. It depends partly on how much the city levies and partly on how a home's value changes in relation to the city's overall tax base. But with home values sagging and commercial property appreciating, it's likely that homeowners as a group will bear less of the city's tax burden, reversing a long-term trend.

Values down, prices up?

Homeowners are getting news of dropping values even in parts of the city where Minneapolis Area Association of Realtors data show rising median home prices in 2007.

For example, median sales prices reported by Realtors for the Longfellow community rose by 3.6 percent last year. Yet some homeowners are getting notices of percentage reductions in the mid-teens. Ditto for southwest Minneapolis, where sales prices rose 8 percent. One explanation is that sales data are gathered across the entire year, while the assessor estimates property values as of year's end.

Lower assessments are more expected in the Camden or the Near North areas, where Realtors reported 2007 price drops of 25 percent and 44.5 percent respectively.

Todd said he expects residential values to be down 3 to 5 percent citywide, before new construction. He said the changes result from comparing a property's current estimated value with where his assessors pegged it previously.

Appraisals are trickier now

Todd said appraisals are more difficult now, with some homes on the lakes still gaining value, while others see big drops.

"You have to be in tune with more smaller pockets than we used to," he said. "We've had far more people calling saying, 'You just can't lower my value like that.' There are people who think, 'You're stealing my equity. This is my retirement.' "

Others see a cut in value as saying that they made a bad home-buying decision, but Todd said it merely reflects a different time in the market. Some worry because they'll be unable to refinance out of an adjustable-rate mortgage. "They're feeling pressured because of that," Todd said.

Although assessors usually throw out sales of foreclosed property for purposes of setting markets, in some hard-pressed areas foreclosed property virtually define the market, Todd said. Moreover, the presence of that cheaper property puts downward pressure on the market, along with an oversupply of homes for sale, he said.

"I guess it's something to do with the subprime mortgage crisis across the country," Kahn said. "I can't figure out how that affects our neighborhood, but I guess it does."

Steve Brandt • 612-673-4438