It's not so simple as "luxury housing" vs "affordable housing". Location dominates every other factor when it comes to how much a place should rent for, including fancy amenities. Why else does a shoebox in SF cost twice as much as a modern 2-bedroom apartment in downtown Atlanta?

If developers build more luxury units then the prices of the older apartments will drop. At worst it's better than having no new housing stock at all.

Yeah... it's also tough, many real estate investment trusts and companies have a fiduciary responsibility to their shareholders to seek a great return on investment. If there's no margin in the affordable housing game, it's not going to fulfill that obligation. :/

The old expensive housing becomes the new affordable housing. Trickle down real estate works assuming the old real estate isn't destroyed.