A 3 bedroom luxury condo never becomes an SRO hotel with shared bathrooms regardless of how little maintenance goes into the place. A neglected property will obviously fall down market in terms of desirability, but a place like that will never reach the actual bottom of the market.

I can't provide a counterexample to the specific 3br luxury->SRO scenario, but it certainly does happen on occasion that previously expensive units wind up getting subdivided into cheaper units. I knew someone who lived in a low-end furnished room (with shared bathroom) that had previously been part of a larger unit.

I'm not sure that is an equivalent example. The previous example was housing falling into a lower tier of the market through lack of maintenance. Your example is actively retrofitting a place to be in a different tier of the market. That isn't really the same thing because your example requires new investments and is actively creating new housing at the bottom of the market rather than just allowing a place to deteriorate through inaction.

You're thinking too specific. Retrofits can be expensive or they can be cheap. The point is that housing stock drifts downmarket as it ages. Sometimes quickly.

I used to live in San Luis Obispo, CA. There's a house in the middle of town that clearly used to be an enormous beautiful mansion. It looks like it belongs on a plantation. It's still beautiful, but it's now 9 funky apartments.

Street view: https://www.google.com/maps/@35.2749914,-120.6611941,3a,75y,...

I'm not sure your point anymore. According to Trulia that is a 11 bedroom, 10 bath, nearly 6k sq ft home. Was it switched to 9 apartments because the place fell down market as it aged or was it retrofitted because there is very little market for a single family house like that in SLO? Also are we even sure those individual apartments are truly down market? Like you said, the house still looks great from the outside. It certainly doesn't look like a "slum" like you mentioned in your first comment.

I criticised a previous comment of yours because of incorrect implication of "induced demand" as the situations are very different but I like this comment.

>Was it switched to 9 apartments because the place fell down market as it aged or was it retrofitted because there is very little market for a single family house like that in SLO?

Definitively, I would have to invite my extended family to fill the building.

>Also are we even sure those individual apartments are truly down market?

They definitively cost less than renting the entire building, which is what stickfigure's anti-apartment stance would mandate.

> It certainly doesn't look like a "slum" like you mentioned in your first comment.

Of course not, it can't look like a slum because the exterior hasn't changed. We are running into a problem here. The classification or living arrangement is apparently the deciding factor behind the "character of the neighborhood" and whether it is a slum. How can that be? Well, maybe it's not the building or the architecture or the zoning and so on, maybe it's the inhabitants that turn the place into a slum? You certainly can't see them from the outside.

We also run into another problem, if there are "evil" people that turn neighborhoods into slums by their mere presence then how do you distinguish between slum people and non slum people? It should be impossible in practice. Of course, there is a reliable(in the sense that it is self fulfilling) visual proxy for that.