Yes but in this period stagnation, cyclical downturns and recession occur. Keynes observed that the investment function in a purely free market economy is incapable of digging it’s way out without intervention. The ROI has to be greater than other available options for redevelopment to begin. The typical answer for this from pre-Keynesian classical econ essentially amounted to “the bottom has to be somewhere.”
Surely though in the real world you need more than a wing and a prayer when implementing housing policy, particularly so when confronted with crises. The bottom, in truth, is simply the maximum amount of suffering that the community can withstand, until it either collapses or demands action from government. Those collapsed cities are all over the Midwest, I grew up in one of 'em. Cities like [Akron] (http://www.ohio.com/news/local/new-report-diagnoses-akron-s-ailing-housing-market-prescribes-treatments-1.748011) are filled with long-decaying neighborhoods whose only hopes, so say the economists, hinge on things getting better elsewhere. There simply are no free market solutions for that. There is no free market solution for this.
I think it’s instructive to look at equilibrium in economics from another point of view- from actual natural law. Achieving equilibrium in thermodynamics requires a defined, closed system. Equilibrium in capitalism requires the same constraints, and everything outside of the system is an externality, and ignored. Which externalities are ignored depends on the question being asked, and how things are measured in relation to each other. Widespread abuse of statistical significance allows economists to build mathematically, intellectually plausible models which that often fail in describing material reality.
