This is fine because a 10 year old apartment with chipped granite countertops, dingy hardwood floors, and aging appliances will rent out for cheaper. Apartments in wealthy cities are always "trickle down" more than "build cheap."
It would be pretty exceptional for a landlord to knock 2/3 off of the rent for an apartment just because its getting run down. It would have to be a real renters market for a good long while to push prices down that far.
My point was that an increase in supply of new luxury apartments does almost as much to generate a renters market as an oversupply of new modest apartments, and it's way easier to get builders to do the former than the latter.
Trickle down housing actually works though because real estate gets used (in high demand areas). Developers build at the high end for the most profit. When those that can afford it move into new fancy digs their vacated units become available to others for less.
