Luxury Apartments Are Bringing Rent Down in Some Big Cities

 According to Bloomberg.  

This is the filtration/filtering argument, that as newer housing is added, people move up to better housing, and in turn are replaced by others moving up similarly.  

I've argued in strong market cities, where housing demand is greater than supply, that filtration doesn't work. Demand for housing means that there isn't a lot of movement even when new supply is added, because demand remains greater.  So lesser quality housing is priced upward without commensurate improvements.  This has been confirmed by recent research.

I argued that only over long periods of time do new additions to housing supply--being priced at the top of the market because prices reflect today's cost for land, labor, materials, and financing--reduce prices.

So in the cities discussed by Bloomberg, the issue is that housing supply, finally, is greater than demand, hence the price drop.

In Salt Lake, at a public meeting last month, the planning director said a vacancy rate of 15% was good, because that put a damper on housing prices ("Apartment glut in SLC leads to lower rents and incentives from landlords," KSL).

After four years of record supply and double-digit rent growth, now there is a glut, leading to competition, heavy concessions and an average drop in rents of 8.25%.

Smith said that while rents are stable in most areas outside of Salt Lake City, they will start increasing if in-migration grows and the glut of apartments is absorbed.

In Salt Lake, the blog Building Salt Lake reports, "Rent is falling in Salt Lake City. It’s putting the squeeze on low-income housing developers," that the "glut" has made it hard to rent out lower income "affordable housing."