If you averaged out the decline in value over the past 12 months the number would be -.07% While the decline appears to be slowing and inventory finally coming back into a balanced range (6 months) the preference would be to see this far more stable than current conditions for a sustained period of time.
Single Family Homes Gilroy
157 Pending (if trends continue as they have been 42% will actually close)
327 Sold in the last 6mo
Hollister as mentioned by Sam is further ahead as far as the correction goes. Salinas is dicey at best. A bad area in Salinas is really bad (drive bys ect) . Also as mentioned by Sam multiple units will spread out your risk, another benefit is that you will usually see a higher capitalization rate (in this example; a higher return on your investment in annual income)
Something you may want to ask yourself is what goal are you trying to achieve?
Are you more concerned about cash flow or future value?
This is a link to a great tool authored by Gary Tharp. I like the second one down (5 yr). It is an Excel worksheet
One way to get information on how the rental market is doing is to call a few local property management companies and ask. That would also be a good time to interview property managers because until you are fairly well versed in landlord tenant laws the 7-10% you would pay them from the rent could save you $ and unnecessary headaches.
Best of luck to you and take your time.