I hear this repeated a lot. In practice, at least in the cities I've lived in, I've only seen housing go downmarket when there's an explicit exodus. The reason

I hear this repeated a lot. In practice, at least in the cities I've lived in, I've only seen housing go downmarket when there's an explicit exodus. The reason is that housing is built for a specific living space size. Los Angeles has so many single family houses that it's impossible to cater to people downmarket...unless houses are torn down and multi-unit housing is built. You could rip those down and build upscale, large apartments, but I feel like I see them sitting vacant instead of moving downmarket. The bust sucks for everyone and the boom (gentrification) sucks for the less well off. Maybe we're saying the same thing, but instead of gradually reaching a equilibrium like you're describing I see a dramatic boom bust cycle--both are held back by lack of building.