Question

Using the filtering model of housing markets, describe what will happen to the apartment market in a city when a large amount of “high-quality” apartments are built.

Answer 1

The filtering theory suggests that, when a greater amount of "high-quality" aparments are built which are obviously higher priced, some lower-priced apartment occupants who can afford these higher priced homes, will try to trade up.
Now, the supply of old vacant houses will be greater as a direct consequence of people vacating and hence, rent for these old homes would decline. While in the long run, the price of new apartments depreciate and affording them gets cheaper for people.