Palo Alto; would rent a house (not apt) in a decent part of PA (e.g., btwn Embarcadero and CA and Alma and Middlefield); realize that many wealthy people in PA and SF region opt to chronically rent, as many dislike housing as an "investment" and prefer liquidity of renting, esp in a major quake zone
PA has by far best socio-economics in region for a middle-income family, with many cash-poor Stanford junior faculty who choose to reside in PA rentals but who tend to be education-oriented as they raise kids...and public elem schools reflect this ethos