I actually myself just loaded up in the sim to look (coordinates are 38.841901 -121.713462) and yes, there is a tightly-packed neighborhood there.
I went up to about 10k feet and it looked like a cloud.
My guess is that the cloud casted a shadow on the ground, and the AI tool they use must have thought that they were houses when in reality, it was the shadow of the cloud 
Just my guess 