06/14/2026
Do The Numbers Add Up?
The subject of numbers emerges at almost every corner of real estate. How often have we heard: "But they paid X for this place, spent Y on the renovation.....so why are they asking Z?" Mathematics and numbers and valuations are often far removed from one another.....
The assessed value of your home is not the market value of your home....and often the market value applied by local governments is far removed from the real market value. The corporate tax rate in the US used to be 35%, but the ACTUAL taxes paid by corporations varied between 16-25%. Many proclaim the rich used to pay 90% tax rates, yet few mention they ACTUALLY paid closer to 40-45%....after (legal) tax breaks. Your Zestimate says your home is worth XYZ, but in reality, it's worth ABC....? An Hermès Birkin bag costs $X for the leather, $Y for the labor, $Z for the marketing, packaging, retail, etc, but costs $15,000 on the retail floor? Is Space-X worth $2 trillion or simply a bet on the future?
Is a home with 9-foot ceilings that measures 5,000 sf worth the same per square foot as one with 12-foot ceilings?.....or 33% more? Is a two story home worth double that of a one story home with the same square footage?
We are told to always look really, really closely at the numbers, but valuation and mathematics are fundamentally disconnected because valuations are often linked to scarcity value (supply-demand) or are subjective opinions of the future, whereas mathematics deals with objective, immutable truths. While math provides the tools to calculate numbers, valuation relies on human judgment to supply the inputs.
So yes, while all the math being broadcast in all spheres of commerce is at a fever's pitch, the reality is VALUE is often far removed from this logic. Valuation is much more human than math....?
Wishing you a SUBLIME Sunday!
