I believe that the downtown condo market has to be considered when predicting where rents are headed.

Given the existing glut of downtown condos already and the fact that more condos are being built, I expect we will have thousands of rental condos downtown before the market bottoms.

This overhang of rental condos will depress the rental market throughout San Diego.

~

My real estate agent deals mostly with view properties and has rented some of them over the years.

It always blew me away when she talked about renting these places for $4000+/month.

When I asked her what type of person rents at those prices she said that they mostly fall into these categories:
1. lots of cashflow but credit so horrible that they couldn’t buy anything or couldn’t get an acceptable mortgage
2. involved in a divorce or lawsuit where it didn’t make sense to acquire new assets
3. only in San Diego for a limitted time

Based on her experience, I don’t believe there are many people who are willing to rent for $4000+/month – ie, there IS a cap on rents in San Diego.