It may be a seasonal thing, but I have been closely following rentals in NorCal and the volume is growing while the prices are coming down. This has been evident in the last 3 months.
Foreclosures and unemployment will probably cause the “substitution effect” to come into play as demand destruction is starting to gain speed. In other words, people may go from homes to apartments or start sharing homes and apartments as a substitute for what they were doing before the problems happened. This will probably cause downward pressure on the rental markets as this trend continues.