The Union Tribune has a look at rent costs in San Diego. "The cost of renting a place to live in San Diego County has increased by nearly 10 percent over the past year, according to a report to be released today by the San Diego County Apartment Association. The poll differed sharply from recent surveys by real estate research firms RealFacts and MarketPointe Realty Advisors. Their reports found that rents in the county had been flat for the past year."

"The conversion of thousands of apartments to condominiums in recent years is driving rent increases, said Richard Lawrence, chairman of the Affordable Housing Coalition of San Diego County. New construction is not replacing rental units lost to conversions, he said, adding, 'That is the most significant factor.'"

"'I think we will have people bunching up in the rental market until single-family homes and condo prices drop,' Robert Pinnegar, director of the association said. 'The interest rates are going up. Home prices are going to have to come down. Something has to give here.'"

"'Folks with kids who hope to be homeowners one day are leaving the area,' said Sue Reynolds, president of a lender and developer of affordable rental properties."

A member of the PIMCO team put this out today. "Three weeks ago my wife and I sold our house and moved into a rental apartment. I believe the U.S. housing market is set to cool given the current level of prices and fundamental trends."

"Recent price gains have likely come primarily from rising speculation and 'creative financing' because affordability is declining and inventories are rising. When asset prices diverge from fundamentals, I favor taking the other side of the trade, even if it involves moving."

"The main forces driving housing price appreciation in the past are now softening. Declining affordability, resulting from rising prices and interest rates, has become a significant headwind facing new buyers. Despite the persistence of creative mortgage financing, prices have now risen to a point where demand is slowing."

"Federal regulators are beginning to crack down on risky lending practices. Speculators are shifting from buyers to sellers. Mortgage application growth is slowing. Finally, and most importantly, the supply and demand imbalance in the housing market is turning sharply for the worse as inventories soar."

"Land acquisitions made by homebuilders over the past few years will not help the current situation. Such purchases are made with the intent of development after a time lag. Therefore, over the next few years, homebuilders will either flood the market with additional inventory or be forced to write-down the value of their undeveloped land on their balance sheets."

"If homebuilders continue to build, new home prices are likely to fall. While good news for potential buyers, it is an unwelcome transformation for would-be sellers, who are probably approaching the point where it is too late to sell."

"Investors in homebuilder companies should pay close attention to liquidity. Real estate is about to become less liquid as turnover volumes soften. Sellers needing cash will likely be hitting bids below the market as buyers turn more cautious. In addition, financing for both homebuilders and homebuyers will become tighter. The period of 'cheap money' is over."

"I am not suggesting that everyone should sell their house and move into an apartment. However, for the reasons discussed above, housing should not be a source of economic stimulus going forward. Watch the 'for sale' signs, in both the housing and corporate bond market, my sense is more of both are coming as the market transitions from a mode of risk taking to that of risk aversion."