> I can imagine it, but I also know that it cannot occur in reality. Some places go down; some places go up.
It doesn't though, that's why you see all those vacant commercial spaces, it's not because no business wants to move in, it's because they don't want to move in given the rent being asked.
The current businesses are forced to close, but not because they are being priced out by someone else, they close because the rent gets jacked, and then the space stays vacant for years after they closed, and yet the rent is never lowered back down.
This goes against common sense, that's why it's so strange and clearly something is broken. You'd expect that the rent would adjust to the market, if no business is willing to rent for the asking price, you'd expect the rent to lower, but it doesn't. You'd expect the value of the building to go down, but it doesn't.
I think you're insinuating that the neighborhood is dying down, because people are choosing to move out or something like that, but that's not the case.
> In your model of real estate, there is no such thing as a ghost town
That's right, because we are talking about major cities. The cities are not dying at all, it is only their liveliness which is. The cities still have all the jobs, and they still have all the infrastructure.
If a neighborhood used to have some of the best coffee shops, and greatest restaurants and comedy club, and those close down. The people in that neighborhood are not going to choose to move out to a small remote town which never had any of that to begin with. They'll stay in the neighborhood, because they go to work at some office job downtown or because they go to the university nearby, or their kids go to the school. Also, the neighborhood might still be livelier than the suburbs which often score very low on my hypothetical liveliness scale, as suburbs generally simply have no such business at all to begin with, only offering residential housing, and even often lacking any walkability.
Edit: I realize maybe saying lively is a bit confusing. I'm not talking about population going up/down, I'm talking about businesses in a neighborhood that create things to do for the people living in the neighborhood. If a neighborhood is only residential, it's not lively, while the more it has of parks, coffee shops, restaurants, bars, libraries, bowling alleys, arcades, bakeries, cute shops, etc., and the more those things are well decorated and designed, and accessible to quickly go to or hop from one to another, the more lively it is.