When a housing bubble bursts, do rent prices decrease accordingly?

[Account Closed]

I want to make sure when I'm buying rental properties, that they can remain profitable in any market. I ignore the possibility of the value of the property increasing,  I only am going to make decisions based on paying low enough for a property that'll give me my desired cash flow. 

However this can all go down the toilet if for some reason I buy at a good cash flowing price in a hot market,  then the bubble bursts and forces rent prices down and I'm not cash flowing anymore.  

I want to minimize my risk as much as possible, does anyone who has been affected in 2008 remember how much your rental income decreased in relation to your property value?

Thanks in advance.  I'm a beginner still trying to figure everything out so all insight and advice is appreciated. 

[Nate Garrett]

Here is a graph, courtesy of the Federal Reserve Economic Data website, that shows median sales prices of existing homes vs. CPI of rent for the last 10 years. You will notice that rents continued to rise during the 2007-2009 downturn.

Notice that rents declined slightly at the end of the recession in 2009 (shaded area). So it would appear that rental rates are correlated most closely with incomes. The effects on rental prices of the decrease in incomes were not felt until a few years after the recession started (lagging).

There was no corresponding decrease in rents during the massive decrease in housing prices in 2008-2009, so it appears rental prices do not appear to be closely correlated with the sales prices of existing homes.

Click here for interactive graph

Here is a graph of median incomes vs. rents demonstrating rents are more closely correlated with income than housing prices.

Click here for interactive version

If you haven't checked out the FRED website and you enjoy looking at historical housing data, I would highly recommend it. You can build your own graphs using thousands of available economic indicators.