This has become a cliché talking-point, but it isn't entirely true. Or, at least, it doesn't fully apply here.
The best contrast to "modernism" would be the episode directly preceding it, namely Art Nouveau or Jugendstil.
There are lots of European cities both large and small that were predominantly built in this style, because it coincided with the rapid growth of cities as industrialisation swept (parts of) Europe. While British cities and Paris are somewhat older, everything east of France saw a major growth spurt in this time.
Because construction was rather centralised, a great many houses of rather similar style were built.
My city, Berlin, is a prime example of this. The core city centre is somewhat older, but about 80% of the housing stock were built within 25 years around the turn of the 20th century.
Here's a street view of my house: https://goo.gl/maps/NRhfef2KEdx7yAET8
If you walk around a bit, you will see newer, mostly ugly buildings. But essentially no houses were ever demolished for aesthetic reasons. Every new house owes its existence to World War 2.
Here's a map showing building age on a block-by-block level: https://interaktiv.morgenpost.de/so-alt-wohnt-berlin/ (click on "Karte aktivieren" to the right). If you hover over different blocks, you will note that for the vast majority, houses were built around the same time. The same is true for wider areas, generally becoming younger as one leaves the centre (as expected for a growing city.
For the "survival of the pretty" theory, one would expect more within-block heterogeneity, with one house surviving and it's direct (ugly) neighbour having been demolished and rebuilt.
Go to cities that weren't bombed, such as Budapest, and you will find entire quarters unchanged since they were built about 120 years ago.
Wasn’t Art Deco in between?
As an aside, I honestly don’t know why anyone tried to ‘improve’ art away from Art Nouveau/Arts & Crafts/Jugendstil: as far as I’m concerned they were the absolute pinnacle, the ne plus ultra of artistic endeavour. I mean, just look at William Morris’s work!
The older buildings probably haven't been replaced because they're attractive enough and work for the residents.
The post-war buildings probably haven't been replaced because, although less attractive, it isn't economical to do so.
There may also be municipal restrictions preventing them from being torn down and replaced, restrictions that probably wouldn't have existed pre-20th century.
If one were going to tear down such buildings and replace them it would probably be best for the replacement to be significantly taller, in order to make more money. But that might not be allowed.
You live in perhaps the nicest residential neighborhood in the developed western world, as far as I can tell.
Sometimes the new is all that is required to be better than the old.
Many structures survive because their destruction would release regulated toxins, which were unregulated when built.
Well since we're playing the false dichotomy game I'd gladly take prosperity with a side of lung cancer over cancer free stagnation.
Your notion of progress is weak.
Unfortunately, the city I live in has been burned, bombed, or otherwise destroyed a couple of times since it became a city in the late middle ages. This destruction happened regardless of likeability or sturdiness of the buildings involved.