From CNN Money Magazine, Feb. 11, 2004: Vacancy Rates Up, Rents Down.. According to this article:
The same forces that drive home prices — such as demographic trends or a shortage in land — should also drive up rents. But when the cost of renting and owning diverge greatly, as they have in some places, would-be buyers decide to rent (pushing down housing demand) at the same time landlords decide to convert their rentals to co-ops (pushing up housing supply).
In other words, if rents go down, the theory holds that home prices will eventually follow.