> If capitalism does what it says on the tin, I don’t get why can't we have a market cleaning price for buildings. Are we doing too much capitalism, or not enough? Is this just all very efficient but I’m not smart enough to figure out how?

Mostly too little capitalism - buildings are very heavily regulated. Zoning, property tax, planning laws, rent control, and habitability laws are big factors. For example maybe it's illegal to rent out the building because the kitchens are too small, and renovating it would not only cost a lot up-front but also push up the property taxes, so you'd have to be confident of getting a return - and maybe you're intending to knock it down and build a replacement as soon as you get planning approval.