Yes, you're right. All of Venice, California, including the canals, used to be very divey and run down. Justin lived in Venice in the early 90's and he said that back then the neighborhood was gang-infested and down right dangerous - he once told us how during the 1992 Los Angeles riots a rabid mob burned down the house across the street from his.
But over the years since then Venice became gentrified and the gangs moved on and today you can't touch the smallest no-yard bungalow in Venice for under a million dollars. As for the manses along the canals - we're talking many millions.
Ah, well. So even though most of us couldn't afford a house along the Venice Canals, anyone is free to stroll around the neighborhood and enjoy the scenery. And, as you foresaw, Romaine, somebody likewise thought that this could be a cute neighborhood, which it now is. Cute on steroids!
Venice Beach, however, is still medium divey - tattoo parlors, "medical" marijuana "clinics", funky ( way funky!) tee-shirt shops - but I still like the place. All kinds of diverse folks (including me!) going about their business, and you can snag a great slice of pizza along the beach!