All of these will happen to some extent, though it's not possible to predetermine the exact combination of events.

In some areas, wages are up. Concrete example, Amazon just doubled their base salary cap for corporate employees to reflect higher wages across the tech industry. These people are able to pay increased rent in expensive areas, buy, or relocate and buy.

If you go through this sub's history you'll see a lot of examples of people stretching their budgets to pay higher rents.

There is a cascading trend of relocation too. People in expensive coastal cities are taking their high salaries and savings and moving to medium sized and slightly cheaper cities like Austin, Sacramento, and Boulder. The increased demand in these cities is pricing out longtime residents who are moving to the next tier down like Boise and Nashville. People there are moving to cheaper cities, and so on.