Rents have been falling here in South OC because inventory is rising and there is tremendous competition. I am on a lease paying $1350/mo. and the same unit now is renting for $1250 under specials because there is so much choice now.

When supply increases, the prices fall. We have had staggering job losses recently because of the RE implosion (OC Register has a layoff list that is a few pages long) and a recession is looming with more job losses ahead. All this means is that the capacity to pay will be diminished which in turn directly affects rents, especially in a market where supply is increasing at the same time.