Kirkland homeowners have watched the value of what is likely their biggest investment plummet since 2007.

Most received a postcard from the King County Assessor during the past few weeks with a continuation of that bad news. And while real estate is all about location, so are property taxes.

Thanks to Washington’s revenue-based system, only a portion of property taxes have declined. Some homeowners in Kirkland will actually see an increase due to local levies that can differ from block-to-block.

King County as a whole will see a rise in property taxes of 1.7 percent. The majority, but not all, of homeowners in Kirkland will see a drop in property taxes this year, according to the King County Assessor.

Most think that their property tax is derived as a percentage of the value of their home, which is true for about half of those property taxes collected. But taxes to pay off levies can actually rise when home values drop.

“Half of the property tax are from special levies for school, fire, EMS … We are a revenue-based system,” King County Assessor Lloyd Hara told a group of Windermere real estate agents in downtown Kirkland last week.

That revenue-based system means that if a $50-million levy is passed, then $50 million still has to be collected. Therefore, no matter what valuations do, that $50 million still has to be collected.

Since levies are such a big percentage of the property-tax system in Washington State, the tax rate will not drop in accordance with a home’s value. That also means that the percentage of taxes, compared to the drop in valuation, can rise.

“If values go down the rates go up,” said Hara.

Washington and Ohio are the only two revenue-based systems in the United States.

But Hara is cautiously optimistic, despite what homeowners are seeing on that postcard.

“We were beginning to see things pick up at the end of last year,” Hara said about the housing market. “We are seeing more houses on the market and more sales. There is a close correlation between jobs and real estate values.”

Those improvements will not be seen on King County property assessment for another year.

“We run at least 12 months late,” said Hara.

Valuations for 2012 taxes are based on assessments made throughout the 2010-11 year.

For some areas of Kirkland the drop in home valuations was especially tough from 2010 to 2011. The median assessed value for Kirkland as a whole declined from $425,000 for the 2011 tax roll to $346,000 for the 2012 tax roll. This resulted in a decrease in the median tax bill of $459.

Kirkland itself is split up into three areas for median valuations. The biggest drop in Kirkland came in the Bridle Trails neighborhood. The neighborhood is located in area 68 and is shared with Bellevue. It dropped 7.6 percent from $715,600 to $661,300.

Area 74, which includes the neighborhoods of Lakeview, Houghton, Everest, Moss Bay, Norkirk, Highlands, Market, South Juanita and parts of Totem Lake, has seen the median home value drop 3.8 percent from $628,700 to $604,900.

South and North Rose Hill and parts of Totem Lake, in area 93, only saw a median home value drop of 2.7 percent from $433,600 to $422,100 from 2010 to 2011. The annexation area, included in areas 37 and 73, dropped 4.5 percent from $343,900 to $328,500.

The annexation of Finn Hill, Juanita and Kingsgate raised the number of single-family homes in the city from 10,557 to 20,170. The majority of those additions have valuations dramatically lower than those previously located within the city limits. That inclusion is expected to drop the medium home value in Kirkland by 18 percent when assessing based on 2011 valuations, according to the King County Assessor’s Office.

But it is yet to be seen if the annexation will raise the value of annexed single-family homes.