Without supply constraints, the existence of wealthy high-end housing demand subsidizes not competes with working class demand. That’s because the primary characteristic of high-end housing is newness. Today’s luxury housing becomes tomorrow’s middle class housing.
This isn’t just theoretical speculation. We know this is exactly how markets without supply constraints work because of the used car market. Rich car drivers who insist on new, luxury vehicles dramatically lower the cost of car ownership for everyone else by creating a robust used car market. There’s no such thing as “auto gentrification” because carmakers can simply create new and better supply to satisfy high-end demand.
Product quality improves continuously and the poor have access to 10 year old cars that are virtually identical to new luxury cars at a small fraction of the price. The used car market is arguably the greatest source of tangible wealth redistribution in the American economy.