(NEW YORK) -- The battered real estate market has another side effect that often goes overlooked, consumer finance and tax experts say. Millions of homeowners are unknowingly paying too much property tax.
According to the National Taxpayers Union, about 30 percent of properties in the U.S. are assessed at higher values than they are really worth. That means their owners pay inflated property tax bills while other taxpayers in their towns reap the benefits.
Cities, counties and school districts are collecting 20 percent more in property taxes than they did in 2006, before the housing bubble burst and when home values were one-third higher than they are today, USA Today reported.
Though some of the assessments may have adjusted, the total amount of local state and property tax collection has only taken a small dip very recently, said Pete Sepp, executive vice president of the National Taxpayers Union. Sepp said that may mean the assessments have been decreasing, but property tax rates may be increasing.
"Homeowners probably haven't been getting the relief they expected when values dropped," he said.
In 2003, the New York Public Interest Research Group examined assessment accuracy of nearly 700,000 homes in New York City and found that 31 percent were incorrectly over or under-assessed, based on fair market value.
Meanwhile, only 2 percent of homeowners appeal their property taxes, according to the National Taxpayers Union.
Lisa Gerstner, staff writer with Kiplinger's Personal Finance Magazine, said most local governments only assess property values every two or three years. Gerstner said it's important to know how your local government assesses properties. Sometimes homes are compared with a recently sold home. Other cities and towns may apply a computer algorithm to adjust property values.
The Census Bureau has data about median real estate taxes paid across the country, and like in previous years, the most recent data from 2010 shows New York and New Jersey collect the highest county property taxes.
Top 15 Counties in Median Real Estate Taxes Paid, 2010:
1. Westchester County, New York: $9,003
2. Nassau County, New York: $8,711
3. Hunterdon County, New Jersey: $8,523
4. Bergen County, New Jersey: $8,489
5. Rockland County, New York: $8,268
6. Essex County, New Jersey: $8,117
7. Somerset County, New Jersey: $7,801
8. Morris County, New Jersey : $7,707
9. Passaic County, New Jersey: $7,544
10. Union County, New Jersey: $7,443
11. Putnam County, New York: $ 7,331
12. Suffolk County, New York: $7,192
13. Monmouth County, New Jersey: $6,917
14. Hudson County, New Jersey: $6,426
15. Lake County, Illinois: $6,285
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