Do new apartments reduce local rent?
Yes, says a modest but consistent body of research.
A study of eleven large American cities in 2010-2019 found that the average new large apartment building lowered rents by 5-7% or $100-159 per month for the neighborhood within 800 feet. Another study found that rules against new housing increased rents in many cities across California, with Los Angeles in particular suffering 25% higher rents compared to what it could achieve if its rules were relaxed to the level of the most permissive city.
Separate studies of individual cities have produced similar results. A study of New York City found that each 10% increase in the housing stock reduced residential rents by 1% for the neighborhood within 500 feet. A study of Washington, D.C. found that the accelerated rate of new housing construction in 2012-2018 relative to previous, slower construction reduced average city rent by 5.8% or $177 per month. A study of San Francisco found that new housing projects in 2003-2017 reduced rent by 1-2% or $23-43 per month on average for the neighborhood within 1,600 feet, decaying until there is no effect past a distance of 3,300 feet.
These studies typically don't find that neighborhoods with new apartments experience lower rents over time. Rather, new apartments partially offset the nationwide trend of increasing rent.
A number of studies have found that new apartments are correlated with higher rent, but these are flawed studies which don't untangle correlation from causation, unlike the studies cited above.