Even in areas where the assessment is supposed to reflect the fair market value, the assessments don't. Forget assessments.
Also, don't pay much attention to price per square foot. That's nearly as inaccurate as assessments. The reason: Price per square foot doesn't reflect most of the things buyers are interested in. It doesn't reflect condition of the house. Age of the house. Style of the house. Size of the lot. Proximity to schools or shopping. Access to public transportation. It even doesn't accurately reflect number of bedrooms and baths. (There are 1,500 sq. ft. properties out there that are nice 4 bed/2 bath homes. There are others at 3,000 feet that are very large 3 bed/2 bath homes.) I even wrote a blog on the subject: http://www.trulia.com/blog/don_tepper/2010/07/price_per_squa
So: Ignore assessments. And pay minimal attention to price per square foot.
So, then, what should you look at? For values, look at real comps. For the home you want, once you've narrowed it down, look at the things that matter the most to you--whether it's a large lot, or a good school nearby, or a newer home. Whatever. Your choice.
Hope that helps.
Please do not pay attention to assessed value. It will only frustrate you and deter you from purchasing the home you find that meets your requirements.
When the dust settles, what any property is worth is what a willing buyer and a willing seller agree to. Anything else, appraisals, CMAs, assessments are just trying to anticipate that. The assessments, however, have other purposes which can cause them to vary considerably from true markeet value. I have also seen them higher than the selling price, though that is less common.
And then there is human nature. Homeowners want a low a value assigned to their home as can be (until they are ready to sell, of course), thinking that the lower it is, the lower their taxes will be. It doesn't quite work that way, but that's another story. They often put pressure on their assessors to lower their assessment and often assessors do this to keep the peace. It happens all over.
A commonly misunderstood concept......
In many locations the assessed value of a home has nothing to do with the home's actual value. The assessed value is a number applied to property for the purpose of generating taxes equally and fairly.