There has been a slight softening of the market in Atherton, Menlo Park and Palo Alto as more homes have come on the market and there are still not as many buyers as everyone thought there would be. Regardless, these towns will continue to lead Silicon Valley in value.
The reason for this are the foreclosures and short sales. Here is a scenario, Let's say there were 20 homes sold in a particular month and 12 were short sales and foreclosures, with the rest normal home sales, the medium price is going to be way down.
Like I said, I don't know what numbers you are looking at, but I would adivse you break them down in areas or neighborhoods rather than cities.