Supply demand curve only works for like goods. A $1200 apartment vs a $2200 luxury unit isn’t the same product and if there isn’t demand for the high end it won’t easily affect pricing on the low end. There’s also the issue of tax credits, these apartments get millions of dollars of credits, paid for by property owners (and their tenants), so it isn’t a clear win, it totally depends on the specifics of the town and the development.