Person A leaves the housing unit they bought for $100k (back when housing had sane prices), to move into a $800k condo. Person B is trying to buy housing in a $200k neighborhood, where everything is currently priced at $600k. Person A's housing unit they just "left", gets listed for sale at $650k.
By your perspective, you perceive this as a "less-high-end" home just opened up. But for 95% of everyone in the country, this is perceived as yet-another $50k jump in the market price.
There is no such thing as "less-high-end" homes anymore. There is no such thing as trickle-down housing. Property values rise too fast (even in areas where construction outpaces population growth).
Presumably when person A's old condo is up for sale at 650k there's a buyer.
Person A moved to condo B for 800k, and freed up condo A worth 650k, and there fore someone else with 650k can move in (which in turn frees up their old place).
I dunno what's trickle down if this ain't it.
Person A sells home for $650k into a 'luxury home' for $800k.
Therefore a 650k home is available. Person B then sells a house for $400k to move into the $650k home.
Person C then sells a $200k home to move into a $400k home.
Therefore the $800k luxury home has created a new $200k home.
This steady movement does not work if there is a discontinuity in the housing prices.
For example say you have 1000 houses in the $200k to $250k range and 1000 houses in the $650k to $800k range. Now person A moves from a $650k house to an $800k house.
That is irrelevant to person C in a $250k house, because while moving into a house that costs 10% more is realistic, moving into a house that costs more than twice as much is very much not.
This discontinuity is what the debate is about and what "so many people" understand differently.
