I just re-ran the data using only central Menlo Park, the area near downtown and Allied Arts. It is interesting;
For 3/2 the average sale price is $1,571,824. the average square footage is 1,988 and lot size is 8826.
For a 4/3 the average price is $2,311,611 with an average square footage of 2,960 and lot size of 12,319.
So the difference in price is not so much location as size of home and lot that are making up the big difference in price. In order to get a true value on this I think you would need to narrow the average square footage and lot size to a more similar number to get the market value of the additional bedroom and bath.