In computer programming there is an old saying, “garbage in, garbage out!” This saying really applies to most things. At San Jose State, my old engineering Professor Myronik would harp on the class that you better be able to look at a result and understand if it appears reasonable – something unreasonable happened in this month’s data.
I often see agents that have programs that coalesce real estate sales data that then automatically distribute the results out to the world without ever really looking at it. This month is a fine example of why you don’t want to do that. According to the MLS, in October 2019 San Mateo County home prices tripled in value per square of living space – they went from $942/SqFt to $2,897/Sqft – not too bad of an increase! I know that Bay Area home prices are high, but they are not that high. This happened also in October 2015 and the MLS never corrected it.
If you’re a data guy like me, you go to the raw data to figure out what happened, it’s easy if you just take the time. So, some agent decided to input that the property they sold was only 1 SqFt in size. That property sold for $775,000 in South San Francisco, the result is that their property then calculates out to have been sold for $775,000/SqFt. Wow! That means that my 2,000 SqFt home would sell for $1.5B. I better sell it quick! Anyway, such a high value skewed the entire average. If you remove the bad data point, then homes in San Mateo County really sold for $988/SqFt of living space. Up slightly from the previous month as is normal in October.
So if you’re thinking about buying or selling one of your most expensive assets, you might want someone who pays attention to the numbers. Call me, 650-346-1595 and I’d be happy to assist.