I based the correlation between the two markets on the predictions from several magazines and other printed sources that San Diego housing prices will fall 20% – 25% in 2009. Since L.A. home prices are continuing to drop and rents are dropping there and the predictions about SD are correct, housing sales will increase in San Diego, forcing landlords to compete with a lower cost of ownership vs renting. Unless San Diego sees a huge population increase that eats up vacant rentals that will occur from increased home sale, it is likely that rents will begin to drop. How much, I don’t have a clue but this scenario is a sure fire method to ignite a decrease in the rental market.
