Rents tend to be pretty sticky. That’s why they appeal to investors and they’re the last thing to drop in the market. The two things that can hurt them are substitution and net migration out of the area. Substituion being that more people share a given unit. Net negative migration speaks for itself. If CA persists in being substantially above the country in unemployment, I think we’ll see migration out start to ramp up. Substitution is tougher to track. But looking at “For Rent” signs and other such market indicators can give you an idea of where it’s heading. Compensating for seasonal trends is also advisable.
