> People who are moving to luxury housing live somewhere now, which is less new.

People living a $1mil shithole aren't going to be moving into a $2mil luxury home. You need to find the buyer that can afford a $2mil luxury house. This is why the problem takes so long to work out. Prices are inflated, and luxury homes will be inflated even more - the people that would normally buy them aren't going to be able to move and afford them. Combine this with how people can just sit on homes rather than sell them, it's gonna take a real long time for prices to make their way down.