You seem to be missing that if prices are lower, demand is lower. Price is a function of demand.

If rents go from 10000/month at 100% occupancy to 5000/month at 100% occupancy, demand has been materially reduced.

That occupancy will recover does not support your point in the way you seem to think it does.

It's a natural market function that a drop in demand will lead to a drop in prices, and eventually, a commensurate increase in consumption (at lower prices)

This happens everywhere, and out of everywhere Seattle is doing the worst.