What does the price related differential (PRD) measure?

The price related differential (PRD) is a tool used to assess the level of assessment bias within a property tax system. It measures the relationship between the assessed values of properties and their market values. A PRD value that is significantly different from one may indicate bias in either direction—whether properties of different types or values are assessed too high or too low relative to their actual market prices.

When the PRD is equal to one, it suggests that properties are assessed fairly across the board, meaning there is no systematic bias in the assessment process. A PRD greater than one may indicate that lower-valued properties are assessed at a lower ratio to market value than higher-valued properties, reflecting a potential bias against less expensive properties. Conversely, a PRD less than one may demonstrate the opposite scenario, indicating that lower-valued properties may be unfairly assessed compared to higher-valued ones.

Understanding the PRD is important for appraisers because it aids in identifying inequities in tax assessments and can help guide adjustments to ensure a fair and consistent assessment process across all property types.