You are correct that there has been an explosion of wealth, but this market segment that you speak of is just that, a market segment. This segment is also extremely small compared the the REST of the population. The luxury buyers do not, have not, and will never represent our population as a whole.
For example, I can't off the top of my head think of a peer that doesn't own a car. However, there are far more people that don't own cars than do. It's just that I happen to surround myself in a social circle of people that own cars, so it seems foreign to me to NOT own one.
The median household income in Minneapolis is $70K year. That means that there are millions and millions of people that will never reach that income level. $70K doesn't cover the RE taxes on our buildings, so I don't think that 70K a year is all that much. However, the average FAMILY would LOVE to make that much money.
Like you, I am not impressed when seeing a BMW, Mercedes. etc, but you have to remember that the majority of our population couldn't afford a $60K home, much less a $60K car.
I could go on and on with examples. I do believe that the luxury market is exploding and there is more room now than ever for players in that market, but a true volume based business will always have a better chance at survival by serving the largest market segment, regardless of the income that that market segment earns.
Last, I think that you mean, "Sell to the masses, live with the classes." I firmly believe that this quote will hold true for generations to come. I can't see the well-off becoming a relatively large class of people, our government would never allow it...