"During the 2001-2002 bust, bay area rents fell 50% in marginal neighborhoods. In desirable neighborhoods, rents fell maybe 10%. Prices to buy came down, but not nearly as much. In marginal areas 20%, in desirable neighborhoods, maybe 1%. Small houses and fixer-uppers in the 10/10/10 school districts (ie, Palo Alto) kept going up. One reason is that construction prices fell 30%, so there was allot of tears downs and renovation happening. "

It was a bit more complicated than that ...

You are correct that rents/prices fell much more in marginal areas, but "marginal" can mean a lot of things. Very expensive, 3-4 million dollar homes are also marginal (or at least, they were at the time) and those fell a lot. There just wasn't a healthy demand for 4 million dollar homes in SF and Marin during that period, and those prices dropped a lot.

So, yes - mid-range (mid-range for SF) houses in desirable areas did not fall a lot ... but just like houses in undesirable areas dropped a lot, so did a lot of other marginal properties - namely, very expensive ones.

Very true. In 2001, landlords of rent-controlled apartments wouldn't even pause the rent increases in the best neighborhoods.

what happened to the Small houses and fixer-uppers in the 9/8/8 school districts?

What's the meaning of 10/10/10 or 9/8/8?

schools

ele/mid/hs

http://www.greatschools.org