[eschaton]

During the mid-20th century, a lot of older housing styles (especially Victorian, and also Craftsmen-era) simply fell out of style. Due to this, along with the generally smaller lot size, a lot of the older neighborhoods became less fashionable and more downscale, even if they didn't actually become ghetto. More recently the process has inverted again, so that older neighborhoods are desirable, but many mid-to-late 20th century neighborhoods are not.

As to whether neighborhoods see demolition and infill, or mere sprucing up, a lot depends upon the existing housing stock. At least judging by surviving housing stock, pre-1900 homes are a relatively large 1,900 square feet. House size shrunk through to the 1940s, reaching a low of 1,320 square feet, before rising again - ultimately surpassing 19th century values by 1990 or so.

Thus in neighborhoods where you see smaller, less historic, but dated housing stock (say Cape Cods) it isn't uncommon to have them knocked down and replaced with McMansions - provided property values are high enough, and construction costs are low enough, for it to be worth the while of buyers to purchase a house just to trash it. But in many places the homes are old enough, large enough, and charming enough that they can build value through interior renovations, sprucing up of the facade, and possibly an addition in the rear.