> the more expensive homes do have the function of allowing people to move out of their starter homes into something that better fits their needs.

another way to look at this is that unlike the working class, if upper-income people want to buy a house, they are going to buy a house. so if there is no new-build luxury housing available, they're instead going to purchase homes that otherwise would have gone to lower-market buyers. this has happened in a lot of desirable cities that have underbuilt for decades; houses and apartments that at first look would seem to be part of the market for the working class and first-time buyers have instead been bid up on and purchased by upper-class buyers because there is so little higher-end housing available. so while luxury housing might not be what we want to see built, allowing those units to go up takes a lot of pressure off of the lower end of the market