According to The Wall Street Journal, a shortage of affordable units is driving prices of mid-range units up faster than luxury properties, as developers focus on high-end housing development projects. As the article describes, ordinary buildings "that cater to middle-class and working-class families are becoming scarcer as fewer are built nationwide and older ones are demolished. That has resulted in a severe shortage of midtier apartments, causing rents for these units to rise at a faster pace than for luxury ones."
More than 80% of new units are luxury, a statistic unsurprising when price is considered: the price to develop luxury versus midtier apartments is not much. Whereas "historically, developers could save some money by building low-rise buildings in suburban locations," now "those are becoming increasingly difficult to build as even suburban officials push developers to develop midrise buildings in central locations and reduce sprawl."
Another factor pushing rent up? "New households are also much more likely to be renters than buyers," which means demand far outpaces supply. And "nationwide, rent increases are inflating the pool of families classified as rent burdened, meaning they spend more than 30% of their income on housing. A report released last month by Harvard University's Joint Center for Housing Studies found that one in five renter households with income of $45,000 to $75,000 a year was rent-burdened in 2013, up from about 18% in 2008 and 15% in 2003."