The degree to which slower rent growth in high-end ZIP codes translates to lower prices elsewhere in the rental market remains an open question. In theory, creating a new supply of luxury apartments should ease competition for older units, making them more affordable to renters who make more moderate salaries.
But that process, called filtering, happens slowly. In the short term, people need to live somewhere, and renters priced out of the top ZIP codes may go apartment hunting in cheaper neighborhoods.
“The initial step down from the luxury segment may translate into more demand in cheaper markets,” Terrazas said.
Renters would benefit more broadly if wage growth caught up with rising rents or if the trend in home ownership rates reversed, said Daniel Hertz, who writes about housing policy at City Observatory. For now, "the number of people willing to pay higher and higher [rents] in more and more neighborhoods is still larger than the amount of housing to absorb that demand," Hertz said.