In 2009 rents dropped rapidly in Mountain View. I moved here in early '09 and my employer paid a realtor to show me around for a day. Told him my budget was $2000/month, and asked about a fairly swanky mostly-corporate-housing-but-a-few-individual-tenants complex. "Oh, that one's out of your price range", he said.

Ended up taking an apartment there for $1400/month six months later, and it stayed at that level for 3 years. (And then shot up rapidly afterwards - I left when it hit $2400/month 5 years later, and it's currently renting for $2900/month.) It had gone down so rapidly that its price was underneath the less-swanky complex a block down the street which normally rented for ~$300/month less and had itself cut rents from about $1800/month to $1450/month over those 6 months.

Rents are sticky - landlords try to avoid cutting if they don't have to. But when there's a choice between letting the apartments go vacant and servicing your debt payments, they have to cut, and if there's a shortage of tenants at that time (because everybody's left and gone home) the cuts can be pretty drastic.

Sorry I'm on mobile right now but the last time this came up I posted graphs showing the median rent in the bay area was flat from 2007 to ~2010. There were certainly some complexes cutting rent, but most renewals were flat and most renters are not moving every year.

I could believe that, but the question that most people are asking is not "What is the average rent that people who choose to stay in the Bay Area are paying?", it's "If I choose to move, can I get cheaper rent?" Certainly I saw that at the higher end of the market in 2009. (The low end of the market - where most people are, and hence the biggest contributor to the average - moved much less then, because there was much less room for it to move.)

I wonder if house prices will also behave similarly. Right now, the "mainstream" market (i.e. the house that working professionals can afford on income and mortgage without being independently wealthy) tops out at about $2.8M-$3M in Mountain View or Los Altos, but there are a lot of houses selling in the $4-6M range that presumably are being bought with stock options. Could perhaps see a collapse of the top end of the market down to the mainstream real estate market if the stock market collapses.

Averages of all rentals are going to be less indicative of reality due to the fact that low income, mid-income, and high income luxury rentals don't necessarily move in lockstep.