Good News for Tenants

San Diego is also seeing a glut of units being brought on the market as rentals, either as new units or as reversions, but rents are still seen rising 3% this year, about the same as last year.

Of course, condos aren't the only kinds of property finding their way to the rental market; plenty of investors are choosing to rent out homes they have been unable to sell at a profit. Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach, Fla., says there's a "shadow market" for rental properties in the state, though it's almost impossible to gauge how large it is, since it consists primarily of individual properties that may not even be listed in the local papers.

"But we know it's of significance because there are some large-scale rental operations that are offering incentives" to tenants, such as a free month's rent, minimal deposit or additional services, McCabe says.

"And they're doing it not because occupancy rates have dropped in any significant way but to try and maintain the high occupancy that they have," he says.