The SROs aren't new construction, but there are still plenty of them around. The example I gave is simplified version of what is happening in downtown Los Angeles as neighborhoods like Little Tokyo and the Arts District are creeping into Skid Row displacing people in low income housing and worsening the areas homeless problem. Meanwhile the new construction in Downtown LA has the areas highest vacancy rates because the luxury market is already saturated. The supply never trickles down because the developer are optimizing for profit and they can see a greater profit with high rents at 85-90% occupancy than lower rents at 100% occupancy.

Here is the first news story I found on Google about the subject.

http://www.latimes.com/local/lanow/la-me-ln-skid-row-tower-2...

Thanks for sharing the article - it's interesting to hear how other areas are reacting to similar situations (I'm in Seattle). I confess, though, that I don't fully understand the applicability of the downtown LA situation to the affordable housing debate. The article linked seems to lament the construction of units that the homeless on Skid Row can't afford, but that seems to be an untenable expectation in the first place. The basic logic still holds that if supply is constrained in downtown LA, the new luxury apartments in the Fashion District will relieve housing demand in the mid- and low-end for that neighborhood. It will be a net good for the area, all things considered.

The protesters in the article seem to conflate one kind of construction with the other: "The protesters say the city should house the neighborhood’s homeless people before it approves another big residential development in downtown Los Angeles."

Market-rate development is a process that can continue to take place while the city grapples with housing the homeless. They don't interfere with one another, since the market-rate construction is private enterprise.

The protesters, further, are falling victim to the same fallacy discussed in the original posted article here: "They also argued that hundreds of new market rate apartments will drive the neighborhood’s rents beyond the means of residents living “precariously” in nearby converted flophouses, hotels, tents and buildings."

The basics of trickle-down housing dynamics work strictly against the rising rents scenario being true. The pressure goes strictly the other way for the existing units in the neighborhood, which have new competition at the top end.