If supply doesn't outstrips demand (as is the case now), prices fall. If there is a demand for "view" properties the price will go up. Just market economics. I deal with this all the time (on both the buy and sell side), and what is interesting is that people will complain that their tax assessment is to high, but when they go to sell its too low
The issue we have at the moment is that most assessments were done a year ago in a somewhat different market. Will they go down to reflect today's reality? I doubt it. Will property values continue to increase in the long run? Sure. True, market value doesn't mean anything until one sells (unless you're the state) , but it is what it is.