>  I feel that there should be some pressure for them to sell that property to families who can use it more productively.

I agree to extents. One lives in NY/NJ/CT because this is a big finance and pharma hub and it makes sense to live here while one works and eventually leave when that resource is no longer necessary.

But there's nuance here, too: families. My wife's side is a big Italian family. Everyone's here. What do you do if your grand kids are all here? How do you support your adult kids and help them achieve financial security? Or leave and secure your own? Neither is an easy choice.

    > There are retirement communities...

There are here as well. The reason they work here, as far as I understand it, is that they count towards "affordable housing" units that are mandated by state law here in NJ. But I put that in quotes because these units in 55+ communities are often honestly still quite expensive, especially if you've already paid off your mortgage decades ago.