Research goal

Affordable Housing vs Slums of Mumbai is a spiritual successor to my earlier research, Shelters vs. Homeless Camps: Bridging the Gap. If you’re familiar with it, you know that one of the main causes of homelessness is a lack of affordable housing. I would like to take this statement a step further and suggest that it’s not just the quantity, but the quality of the existing stock, and I don’t mean only construction quality.

The first step to any successful design is correctly defining the design problem. In part 1 of this research, we will explore the status quo of affordable housing, existing schemes, and their problems.

Profit Machine

To explore affordable housing, I created a diagrammatic abstraction of our political and economic system. I call it the Profit Machine. Similar to an architectural diagram, this abstraction allows us to see the bigger picture behind all the distracting details of political affiliations and individual market players. I will also anthropomorphize the profit machine for the sake of narrative simplicity.

The Profit Machine will be a tool we use to test the present, former, and proposed affordability schemes and predict their inevitable outcome (or comprehend the outcome if it has already happened).

The key to Profite Machine’s function is the following thesis:

Good intentions always lose to good incentives. Sometimes right away, but often slowly, over many years.

Affordable Scheme #1: Value Engineering

Some might think that the solution to affordable housing is fairly trivial: the dreaded value engineering. Architects are no strangers to cutting costs, as seemingly every project is over-budget. The formula of affordable housing under Value Engineering appears as follows:

Make everything as small as possible, cut amenities, and always pick the cheapest thing from the catalogue.

Let’s hand it to the Profit Machine and see what it does. As expected, instead of passing savings to the consumer (the intention), it simply pocketed the difference as an inflated profit margin (the incentive). This results in a luxury price tag on what should be affordable housing. We will call such an imposter a fauxury development. The typical example of a fauxury development is a ubiquitous Five over One: a five-story wood frame built over a one-story concrete floor, or, in Profit Machine terms, five stories of value extractors and one story of marketing trap.

Five over One

• Design goal. Maximize profit per square foot.

• Reason for “Five”. Wood frame remains one of the most cost-effective structure types in the US. It has low material and labor costs, and it is very forgiving of errors and poor craftsmanship. This makes it an ideal choice for a value-engineered apartment complex. Building codes in most jurisdictions limit the height of wood frame construction to five floors (as of 2025), hence the “five.”

  Value-engineered units are making their best chameleon impression, hiding all the issues until the ink on the rental agreement is dry. The hardwood laminate floor and faux stone countertop are there for marketing purposes only. A windowless den insists it’s a bedroom. Oxymoronic marketing terms such as “luxury microliving” are in the air.

• Reason for “One.” The “one” concrete floor is a marketing device that does all the heavy lifting of renting the uninspiring units above. At a minimum, “one” contains a lobby, a leasing office, and some amenities, all designed to appear luxurious at a passing glance during a walk-through. The lobby is the first and last thing prospective residents see, so it has the highest-value furniture and finishes to make a good first and last impression. The amenities consist of something that can be procured and furnished second-hand with a heavy discount: a gym, a pool table, a shuffleboard, a conference room, a hacky sack corner, etc.

  The “one” often contains large rental commercial properties, aiming at a large anchor tenant with deep pockets, whom we will collectively call McWallgerts. Smaller businesses by and for residents are priced out, and as a result, the commercial space will sit vacant for years.

With five-over-one as the reigning king of fauxury development, let’s amend the formula for value-engineered affordable housing:

Fauxury minus marketing.

No other cost can be cut from fauxurey, as it has already evolved over the years to be as cheap to build as possible. As all distractions of the sales devices exit the program, a poorly done wood frame structure is all that remains. This wood frame structure will likely be derelict around the time the mortgage is paid off, and the building will exit the market. Even with that move, the unit cost often turns out too high and must be bridged with subsidies and social programs.

Relentless cost-cutting and our design efforts to make it work have another unintended side effect: normalizing the high price tag for a lower-standard unit. Microhousing, which was hailed as a solution for affordable housing, is now sold at the same price that normal-sized housing used to have just ten years ago (marketing, as always, does the heavy lifting). Even true luxury units will be offering a windowless den, a closet for sleeping in, as a bedroom. In other words, any cost-cutting innovation we plug into the Profit Machine will, over time, become the new norm and join the profit margin.

While value engineering is inevitable in designing affordable housing, it will always fail as the main design intent.

Affordable Scheme #2: Secondary Market

The format for the Secondary Market affordability scheme is as follows.

Luxury development + time

True luxury development is, by definition, the newest, shiniest thing. While some luxury developments remain luxury thanks to successful iconic design or meticulous maintenance, most fall out of favor and enter the secondary market as affordable housing.

In profit machine terms, the following happens: The building was almost certainly developed with borrowed money. After the mortgage is repaid, the largest expense goes away, which the machine initially pockets as a profit margin. Over time, the building ages, and maintenance costs stack up. This starts to deflate the profit margin until the machine rebels and slashes the maintenance costs to stabilize the profit margin. This is the beginning of the building’s death spiral. With poor maintenance, the worn building scares away some high-paying customers, which deflates the profit margin further, which further reduces money allocated to maintenance, which scares away even more high-paying customers. After a dozen or so such loops, the building finds itself affordable. There, it hopefully stabilizes as affordable, but it often continues to spiral until it reaches a derelict state: affordable, but substandard.

The scheme functioned well for decades, and the luxury apartments of old have become affordable housing today. However, in recent times, the scheme was disrupted by fauxury development. Fauxury has evolved planned obsolescence (I hope it wasn’t designed with planned obsolescence in mind). Most five-over-ones are built so poorly that they never enter the secondary market. Their death spiral begins before the mortgage is paid off, sometimes within the first three years of use. The building gets punted from one management company to another, none holding it for a significant period of time, and all trying to dodge maintenance fees as much as possible. Some of them win, but most are left holding the bag. Inevitably, after all the dodged maintenance, the building reaches a derelict state, at which point it gets reset by the next owner: gutted to studs and renovated, or rebuilt entirely, elevating it back to fauxury status and restarting the process.

As a result, the stock of affordable housing in the Secondary Market scheme declined, elevating the median cost of apartments everywhere. As more 1960s, 1970s, and 1980s apartments (built before the fauxury development began its rampage) exit the market through dereliction or redevelopment and fauxury development sidestep the Secondary Market scheme, the situation gets worse.

Affordable Scheme #3: Mass Housing

The Projects, a layman's term for mass housing, are the government’s solution to affordable housing.

The government is the biggest cog in the Profit Machine, by design. The government fulfills regulatory functions to keep the Profit Machine healthy, and it must be bigger and more powerful than any other cog to do so. Fulfilling regulatory functions and keeping the Profit Machine healthy is like feeding broccoli to a toddler. Tantrums and setbacks are inevitable, but we must persist. Unfortunately, since the 1950s, we haven’t persisted much. One regulatory function of the government after another yields to the tantrums or gets subverted by them. Among the relinquished regulatory functions was mass housing, aka the Projects, which we will explore now.

The formula of the Projects scheme was as follows.

Refulator develops and keeps large volumes of affordable housing at a loss to boost the profits of other market sectors.

This stock of affordable housing acted as a persistent alternative to market housing, thus keeping the prices in check. It is not that a regulator hates profit—it wants it as badly as anyone else. However, being a big, powerful, omnipresent, and slow-moving entity, the government is often willing to take losses in inherently less profitable sectors to boost other, more profitable sectors. It is also capable of taking and stockpiling losses in the form of national debt for decades in favor of nebulous benefits in the future. No other Profit Machine entity has the patience to take losses for so long, nor the mechanisms to outlive them, which makes the government a uniquely positioned cog.

Exception. Some non-government Profit Machine entities span multiple market sectors and also subsidize losses in one sector with gains from another. Over time, if there is no other economic link between the losses and gains sectors, the entity simply cuts the loser loose. In rare cases, losses in one sector directly boost another, as with the Japan Railway Group. Public transit is a chronically unprofitable endeavor. Any increase in ticket cost will simply drive more riders towards buying a car. Facing that, Japan Railway Group pivoted to real estate, correctly reasoning that a train station creates an influx of people and drives the surrounding property values up. They continue to develop and maintain the train network at a loss, which directly boosts the profits of their real estate business, creating an overall profitable business. Today, Japan has one of the most robust public transit systems in the world.

The value engineering of mass housing had a system-wide long-term outlook. The government intended to hold affordable housing indefinitely and had no interest in getting saddled with unnecessary maintenance fees. They leaned towards higher-quality construction: commonly, a reinforced concrete frame. The government could get a significant discount from suppliers, making it worthwhile through the sheer volume of the order. It was also willing to take a loss on the project from the start, driving the cost further down.

So far, all the components of successful affordable housing are present. However, system-wide value engineering has its faults. First, it prefers human anthill types of projects: megatowers, megablocks, etc. Second, it prefers a cookie-cutter approach to design, falling into a one-size-fits-all approach that, as always, fits no one. This is further exacerbated by the government being inherently slow and forever playing catch-up with the situation on the ground, therefore creating projects that are out of sync with the people’s needs. Third, the government is often tainted by ideologies and biases, which distort its perception of who the users of affordable housing are and what to do about them.

All these factors combined created projects that, despite being affordable, were programmatically doomed from the outset. Let’s examine a typical example of such a project.

Human Anthill

A human anthill, stacked into a single tower or in the form of multiple smaller blocks, seems like a natural choice. It allows us to create a significant number of units on one site at a low price. However, apartment blocks are great at one thing that’s in the typology name—keeping people apart. The occupants are separated from one another both horizontally and vertically, offloading the function of socialization and community creation to the street. That only works if the following two conditions are met:

• You can access the street in under a couple of minutes. The longer the access time, the more the residents will avoid the hassle of going down.

• You have an incentive to be on the street. Few people will go out solely to socialize. Socializing should happen spontaneously and organically, as an extra of other functions, if it has any chance of sticking.

Now, let’s look at the human anthill. Residents above floor five have no connection to the street and won’t go down unless they absolutely must. Going to the street is almost a five-minute trip involving going down a long hallway, waiting for an elevator, taking an elevator, and exiting the building. Five minutes sounds like nothing once, but over time, residents begin to avoid the hassle entirely.

As for the incentive to go down, the vast majority of anthills exclude a critical connective tissue of any successful low-income community: local businesses by community for community. Local, by, and for are all critically important attributes. If they are not local, then the residents must spend their limited time and money to reach them. If they are not for the community (export-oriented), then the community won’t use them and will more than likely be priced out of using them. If they are not by the community, then the revenue generated will exit the community to never be seen again. For a low-income community to be successful, as much revenue as possible must circulate internally.

In a slum, the ground floor is always reserved for shops and services. In a human anthill, the ground floor is used for more apartments. This is done partly to maximize the number of units and partly because the government naturally assumes that low-income residents are not business-owner material. All anthills are surrounded by everyone’s (and therefore no one’s) lawn, lacking any utility and actively preventing a vibrant street from emerging. You can play frisbee and frolic through the lawn wasteland only for this long before abandoning it entirely.

With no eyes on the “street” (empty lawn), no sense of community, residents boxed into individual undersized units, and a lack of easy-to-access services and amenities, the situation in the anthill quickly turns sour. Escalating crime rates and even emerging gangs (a subverted community) are a typical and entirely natural outcome. What else is there to do except manufacture, distribute, and consume substances?

Well, hold on. How does the apartment-dwelling middle class avoid the same situation? Their apartments are also entirely disconnected from one another. They might have more businesses and amenities, but that can’t possibly be the key difference. All true. However, the middle class has the disposable income to get lacking services elsewhere and overall cancel out many shortcomings of an apartment tower. The same is true for all other missing functions - they’re available elsewhere for a fee that is over-budget for low-income individuals. In other words, the middle class socializes by going out and consuming overpriced tapas, while the low-income don’t have the same opportunity. The middle class has a country club and can afford the membership fee. The country club of the low-income community was the street, and we took it from them.

Mass housing might have created an equal environment for the middle class, but it failed to create an equitable environment. Low-income individuals found themselves surrounded by opportunities and functions, none of which they could use, and nothing they could do to address them.

Human anthills turned into blight one after another. Other cogs in the profit machine despised this broccoli from the get-go and wasted no time stomping it into the ground. The government withdrew from regulating the housing market and resorted to subsidies instead.

The failure of mass housing in the US (and many failures in the US) doesn’t mean it can’t work. It successfully works in many Scandinavian countries, with some governments holding as much as 40% of the housing market. He can attribute the success to the superior, inherently walkable urban fabric in those countries where a human anthill surrounded by an empty lawn naturally doesn’t happen. That said, it’s not like they didn’t try to pull it off. More on that in the next affordability scheme.

Affordable Scheme #4: Scavenging Failures

The architectural profession suffers from the Midas touch. Assuming predominant competency, anything we touch turns into gold, and gold is expensive. There is a reason Profit Machine loves us—we make any dystopian idea look good, from micro-housing to container living. Profit Machine gladly butters these affordability ideas with marketing and sells them at a full market price, ignoring our displeasure. Midas’ touch makes us uniquely incapable of making anything affordable. Therefore, the formula of affordable housing could be the following:

Screw up.

Should we do a bad job on purpose? Should we do a reverse Midas touch (I’ll let you imagine what kind of substance is anti-gold)? Of course, we shouldn’t fail on purpose, nor do we have to. Despite our turtleneck sweaters and black-and-white photos in thoughtful poses, we will screw up, sometimes royally. No failure is purposeful, but all failure is inevitable (don’t confuse inevitable with preventable). Some projects will fail, whether through our incompetence, arrogance, or factors outside of our control. As such, we must recognize failure as a steady supplier of affordability and scavenge it.

The amended formula for this affordability scheme is the following.

Learn from and scavenge failure.

Learning from Failure

To prove that nobody is infallible, let’s examine Bijlmermeer—a rare example of Dutch urban failure.

Bijlmermeer was designed by competent, talented architects, yet it failed before a pencil touched paper. The foundation of a successful design is a well-defined design problem. The design problem Bijlmermeer set to solve was the overly-crammed urban fabric of the city. For all intents and purposes, it was solved. Bijlmermeer isn’t crammed. It is full of open spaces, forests, lakes, and it has a clean, modern design—what's not to like? The project still looks great, even discounting its respectable age (conceived in 1965).

However, designs rarely fail because of aesthetics—there are plenty of enduring ugly buildings. All designs fail due to programming. Cities are dense for a good reason. Density was not a problem, but a solution to a dozen other problems. As Bijlmermeer solved density, it unsolved many issues density used to solve, the key among them being safety (I won’t cover others, as an exhaustive body of papers and videos already exists).

High density acts as an excellent crime deterrent. Plenty of eyes on the street make any criminal act difficult. The lower the density, the easier it is to commit a crime. If there is an immediately accessible place to retreat and hide, such as a generously provided forest, it’s even better. Finally, instead of shops and services on the first floor, always active and therefore observable, Bijlmermeer had… long-term storage for the units above. Not only did it eliminate all eyes on the street and terminate all activity on it, but it also created a perfect target for a burglary.

It was the perfect storm: no observers, a place to retreat, and an easy target. The crime blew up. Middle-class residents whom Bijlmermeer targeted bowed out of this mess before even properly settling in. The prices dropped, the building became affordable, and low-income residents started to move in instead.

With the target demographic missing, all middle-class assumptions of Bijlmermeer became null. The local residents couldn’t afford to reach and pay for the off-site services and amenities. Without local businesses by and for the community that are critically important for low-income residents, Bijlmermeer was set on the path of US Human Anthill, quickly turning into a blight.

The project's fate was predictable. Most of the Bijlmermeer was torn down, with only a handful of buildings remaining on the life support of the surrounding successful urban fabric.

There are multiple lessons we can learn from it, all of them very important when approaching, for example, slum redevelopment:

1. Not all pretty designs are good.

2. Not all ugly designs are bad.

3. Sometimes a problem is actually a solution.

Scavenging Failure

The profit machine is a brutal mistress. As it marches on towards profit, it leaves a trail of dead typologies in its wake. For example, in the 1980s, as the US pivoted from manufacturing to service economies, thousands of factories across the country shut down and sat vacant. Today, the large windows and tall ceilings of these factories have become a great fit for luxury apartment complexes.

Something in demand and expensive today may become abandoned and cheap tomorrow. The rise of e-commerce is responsible for the fall of malls, many of which sit vacant across the country, surrounded by equally vacant vast parking lots. Many big-box stores have a limited lifespan on purpose, tuned to extract maximum profit out of the neighborhood and exit right before the profits would fall, leaving the neighborhood with a huge, vacant, windowless building. COVID-19 and the resulting rise of the hybrid work model took a big chunk of revenue from the rental office spaces, with many smaller and medium businesses gladly removing the rent from their overhead. While some larger businesses aggressively pushed return-to-work, many offices remain vacant and underused.

Each of these examples presents an opportunity for us to create affordable housing. One of the more unique examples is Arcade Mall in Providence, Rhode Island. One of the oldest malls in the country, it also struggled in the wake of e-commerce. Today (as of 2025), the third floor of this complex was redeveloped into apartments, leaving the bottom two floors for commercial properties. This is a step in the right direction. While the businesses below are not run by the residents and lack in services they provide, they are accessible to the residents in under a minute and are generally affordable to them. There is a way to make this model even better, but we will see how in our Indian Slum exploration further.

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Designing affordable housing from the ground up is an extremely difficult process with many pitfalls. Luckily (and tragically), the Profit Machine will never stop running over things, which presents us with endless scavenging opportunities to drive down the cost of housing.

Affordable Scheme #5: Relinquished Ownership

Once we squeeze all we can with value engineering and the building stubbornly remains unaffordable, we get creative and enter an exciting minefield of the relinquished ownership scheme.

This is a whole family of schemes, all starting the same way: we relinquish the ownership of an asset that normally belongs to a resident. Then, we either make it shareable across multiple residents or give it to a third party so it can be leased back to the resident.

Leasing example: relinquished land ownership

Leasing schemes are beloved by the profit machine because they make the participants an easy target for profiteering.

• Intent: Residents own a home but not the land under it. They pay a reduced mortgage and a perpetual lease for the land.

• Profit Machine: It patiently waits as the community develops and property values go up. Then, as property values reach their peak, it jacks up the lease, driving residents into insolvency. From there, it demands that they vacate the land and take the house with them, which ranges from too expensive to simply impossible. The residents are evicted both from the land and from their house. The land and the house are now ready for the scheme reset or land redevelopment.

• Fun fact: an extremely powerful and highly litigious fast food chain, which shall not be named, rose to prominence through this scheme: owning land under other people’s restaurants, bankrupting them with high rent, then taking their business over.

• Ethics Lesson: If you are selling this scheme to the public on behalf of your client, you are walking a tight rope. The code of ethics obligates you to make the public fully understand the possible consequences. However, you can’t tell them not to do it because that would break your obligations to the client. The public will ask you what you would do. Answer: “I’d find a lawyer who can explain to me the terms of the rental agreement line by line. I’m not a lawyer, I can’t do that.”

Shared Assets

Sharing assets to save costs is a neat, scalable idea. However, each shared asset opens us to programmatic failure and conflicts among sharing parties.

• Land Sharing.

  • Whole. The idea of land sharing created an apartment complex typology. We stack units on the same plot of land, sharing the cost of land across all units. The downside—units end up highly isolated, which is detrimental to any community, especially low-income.

  • Partial. For example, a shared backyard. On one end, you have a platform to party together. On the other hand, you might accidentally schedule two private parties simultaneously or have a loud party when someone else is trying to sleep after a night shift. Communication and careful schedule management are key.

  • Easement: Classic pavement. Pavement, a public connecting tissue between the houses, belongs to the house directly in front of it, but anyone can walk on it. This promotes the “hi neighbor” accidental interactions and also leaves you wide open to a lawsuit if your neighbor ever slips on your pavement and breaks a leg.

• Structure sharing. Two units in a duplex share a wall. A unit in a row housing shares two walls. A unit in an apartment complex shares two walls, a ceiling (as a floor for the unit above), and a floor (as a ceiling for the unit below). In slums, it is taken even further; exterior walls often collide with their counterparts across the street. Any structural sharing creates an odd juxtaposition: isolation on one end and hearing a loud argument of your neighbors as if it happens in your bedroom on the other.

• Sharing Amenities.

• Room Sharing.

  • Bedroom. Sharing with your partner is pretty effortless. Sharing with your siblings will likely result in a DMZ at some point and unending conflict over “borrowed” assets. Sharing with your roommates (dorm situation), a stranger from the onset, is a big gamble and the most intrusive arrangement, as your private lives and different schedules will routinely collide. Also, if you have different ideas about the terms such as “clean” and “quiet,” the arrangement will likely blow up.

  • Bathroom. This has the same concerns as the above. The lock on the door helps to manage unwanted intrusions, but that’s about it. Cleanliness (and odors) is a huge sticking point. Don’t propose a shared bathroom across more than two individuals, unless you have a compensated third-party (janitor) cleaning them. Any soldier assigned to latrine duty will tell you in graphic detail why doing otherwise is a horrible idea.

  • Kitchen. Scheduling is fairly easy. Asset sharing is less so. Eating each other’s food happens by accident and on purpose. The biggest source of conflict is a mountain of dishes and an overflowing trash can.

  • Living room. This is the least conflict-ridden room to share. Conflict is unlikely to start here; it will only come from other rooms, and if it does, the police presence is likely.

  • Lesson: communal housing. If you attempt communal housing, use a hotel as a starting point, as it is the most successful and culturally neutral communal housing typology. That means having a private bedroom, bathroom, storage, closet, and fridge so the occupant could secure food and items, rest, and relieve themselves privately. This will eliminate most conflicts and increase the chance of project success. Be careful pushing the communal aspect further than that, as it only works with fairly culturally homogeneous groups (such as students with the same major and schedule, a family, or a group from the same church). Don’t offer any sharing without knowing the implications, ideally by experiencing such implications first-hand (unfortunately, I lived through them all).

Affordable Scheme #6: Re-Development

Over time, land values tend to rise, including in low-income communities. Profit Machine reasons that a low-income community is not the most profitable way to utilize high-value land. The Profit Machine continuously corrects the situation with redevelopment, shuffling low-income communities to “more appropriately valued” plots of land. Such a process is known as gentrification. The Profit Machine employs a variety of shuffling techniques, depending on the situation, that we will explore in this section.

Instant Gentrification

Profit Machine wants low-income communities off high-value land, ideally ASAP. It moves to buy them off for below-market price. Profit Machine approaches residents one by one so they don’t recognize the gentrification process for as long as possible. Profit Machine can’t hide it forever, so the last bunch will be bought off for market price, or above. Sometimes we end up with a Nail House (someone who won’t move no matter what), but this situation is rare, and we’ll just build around it.

The process for rental properties is straightforward. The purchase is negotiated with the landlord, then tenants learn that their rental agreements will not be renewed. From there, Profit Machine simply waits as the residents disperse to other low-income communities.

Delayed Gentrification

Once in a while, Profit Machine encounters an informed or, worse, organized group of owners who are well aware of what they have and gentrification barreling at them. Buying them off at below-market prices is not an option, and without it, the redevelopment won’t be as lucrative. Negotiations commence, and Profite Machine promises the community that it will remain in place, just in a better-looking building. Residents will get new apartments, and businesses will get new spaces for lease, with better amenities.

From there, it’s a two-prong attack. On one end, Profit Machine prices out existing businesses (serving low-income residents) with rent hikes, continuously displacing them with more premium businesses. On the other hand, the residents get hit with high HOA fees, high utility costs, high taxes, high service prices, and an overall infrastructure and opportunity network that targets high-income individuals (equality over equity process). The only option is to either sell or rent the property out. Profit Machine then scores some political capital by saying, “I tried to do a nice thing, and they just cashed it in.”

It takes a few extra steps, but the result of delayed gentrification is the same.

Eminent Domain

Sometimes, the government branch of Profit Machine wants to build something large, like a freeway network. This poses a problem of acquiring large amounts of land from many stubborn owners. When Profit Machine tries to build a freeway through a wealthy (often white) neighborhood, it encounters aggressive, well-funded resistance. Following the path of least resistance, Profit Machine turns on low-income neighborhoods (often minorities) as they put up less of a fight.

From there, the residents are forced to sell at “just compensation.” The government has a peculiar idea about what’s just, so the sale price is often below market. Eminent domain has destroyed many up-and-coming minority neighborhoods (such as the Rondo community in Minneapolis), not only setting them back but also leaving them worse off.