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. However, it’s not just the quantity, but the quality of the existing stock, as many of the affordable housing schemes are programmatically broken.

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 Profit Machine. Similar to an architectural diagram, this abstraction allows us to see the bigger picture behind all the distracting details, in this case, politics, emotions, and the conduct of individual market players. I will also anthropomorphize 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 trivial: value engineering. Architects are no strangers to cutting costs, as seemingly every project is over-budget. The formula of affordable housing under Value Engineering is 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. Instead of passing savings to the consumer (the intention), it pocketed the difference as a profit margin (the incentive). This results in a luxury price tag on 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, a five-story value extractor over one-story marketing trap.

Five over One

• 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 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.

• One. The “one” concrete floor is a marketing device selling the uninspired 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 cheaply or second-hand: a gym, a shuffleboard, a hacky sack corner, etc.

  The “one” often contains large rental commercial properties, aiming at a large anchor tenant with deep pockets. Smaller businesses by and for residents are priced out.

With fauxury five-over-one being the predominant development scheme nationwide, 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. Even with that move, the unit cost is often too high and must be bridged with subsidies and social programs.

Normalizing the substandard

Architects can make any dystopian idea look good, unintentionally normalizing the premium price of sub-standard offerings. Microhousing, which was hailed as a solution for affordable housing, is now priced as a full-size house from a decade ago. Even true luxury units will offer a closet for sleeping in (a den) as a bedroom. In other words, any cost-cutting innovation we plug into Profit Machine will, over time, become the new norm and join the profit margin.

Lesson: While value engineering is inevitable in designing affordable housing, it is a dead end 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. Over time, the building ages, and maintenance costs stack up. This starts to deflate the profit margin, creating an incentive to slash the maintenance costs as the fastest way to address the problem. This is the beginning of the building’s death spiral. With poor maintenance, the 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, and so on. After a dozen or so such loops, the building finds itself affordable or even derelict.

The scheme functioned well for decades, and the luxury apartments of old have become affordable housing today. However, in recent times, the scheme has been disrupted by build-to-sell and buy-to-sell schemes.

Build-to-Sell

Unlike build-to-own, build-to-sell has no direct incentive to worry about longevity and maintenance fees. Maintenance and longevity would concern a long-term buyer, but we have multiple short-term buyers in quick succession. Short-term buyers play a game of hot potato, bouncing the building from one real estate portfolio to another. The goal is to hold it long enough to make a profit but sell it quickly enough before the property value falls, often as a result of a massive, inevitable maintenance disaster.

Build-to-sell buildings evolved planned obsolescence. Unconcerned with long-term survival, they are incentivized to cut as many corners as possible, thus reducing the chance of entering the secondary market. After being held by many short-term owners, none of whom were interested in paying for 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 more old luxury apartments exit the market through dereliction or redevelopment, fauxuries fill the void but fall apart before ever reaching the secondary market, undercutting the stock of affordable housing.

Buy-to-sell

This is an added “value” variation of the aforementioned hot potato players. Unlike buy-to-own, buy-to-sell views buildings as short-term investments. The classic scheme is so-called house-flipping: buy an affordable building, renovate it (add “value”), and sell it as fauxury. Of course, Profit Machine has no incentive to do a good job and hides any issues it encounters instead of fixing them. For example, if it finds a leak, it simply paints over the water damage and hopes it won’t rain before the sale. After long-term buyers got burned by flipped houses a few times, they learned to avoid any house that’s resold in less than three years. This resulted in the scheme looping on itself. Buy-to-sell players are forced to sell properties to each other, often at a loss. Yet, they persist.

***

The build-to-sell and buy-to-sell models proliferate fauxury development, using affordable housing as fuel and elevating the cost of housing across the economy.

Affordable Scheme #3: Regulator

Government

The government is, by design, a regulator and the biggest cog in the Profit Machine. A regulator is responsible for keeping Profit Machine healthy, and it must be bigger and more powerful than any other cog to do so. Keeping the Profit Machine healthy is like feeding broccoli to a toddler. Tantrums and setbacks are inevitable, but we must persist. Unfortunately, in the US, we haven’t persisted since the 1950s. One regulatory function of the government after another yielded to the tantrums or got subverted. Among the relinquished regulatory functions was the government’s solution to affordable housing - the Mass Housing (aka the Projects), which we will explore now.

Mass Housing

The formula of the Mass Housing 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 present in every market sector, the government is often willing to take losses in inherently less profitable sectors to boost other, more profitable sectors, resulting in a net profit. The government 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 in the Machine.

Fun Fact. Some private companies, notably Japan Railway Group, use a scaled-back version of the scheme. 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. Japan Railway Group continues to develop and maintain the train network at a loss, which directly (important) boosts the profits of its real estate business, creating an overall profitable business. Today, Japan has one of the most robust public transit systems in the world - a testament to the scheme’s success.

The value engineering (you can’t escape it) 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, which is less forgiving to poor craftsmanship. 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.

1. The government, a big entity, prefers big projects affectionately nicknamed human anthills: megatowers, megablocks, etc.

2. The government leans towards cookie-cutter solutions because it doesn’t want to bother negotiating with too many cogs. The result is a one-size-fits-all solution that never fits anyone. Worse, the government, being inherently slow, is chronically lagging behind the market, therefore creating projects that are programmatically out of sync with people’s needs.

3. 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 the regulator to create a significant number of units on one site at a low price. However, apartment blocks are great at one thing—keeping people apart (it’s in the name). 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 must happen as a side effect of other activities to fill the awkward silences.

Now, let’s look at the human anthill.

• Long access time. 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 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.

• Nothing to do. The first floor is occupied by apartments instead of businesses, partly to maximize the number of units, partly because the government deems low-income residents as not business-owning material. As such, local businesses by and for the community are missing entirely, which is a critical connecting tissue. Local, by and for are all critical components. If the businesses are not local, then the residents must spend their limited time and money to reach them. If they are not for the community, then the community won’t use them or be priced out of using them. If they are not by the community, then the revenue generated will exit the community, which the community can’t afford.

  What is there instead of businesses, services, and a vibrant street life? The Great Lawn. It is a massive green, functionless area that is for everyone, and therefore no one in particular. Residents can frolic through it and play frisbee, but it gets old quickly. It’s not long before the Great Lawn gets abandoned entirely.

With no reasons to be on or look out onto the Great Lawn, no sense of community, residents boxed into individual, undersized units, lack of easy-to-access services and amenities, and lack of economic opportunities of any kind, the situation in the anthill turned sour. Economic decline, escalating crime rates, and even emerging gangs (a subverted community) are typical and entirely natural outcomes. What else is there to do except manufacture, distribute, and consume substances? The only positive outcome of the Projects was platinum R&B albums about how awful it was growing up there.

Middle-class apartment complexes, with largely the same program, avoid this fate because their residents have the means to obtain the lacking program elsewhere. Middle-class residents can pay for tapas and go to country clubs to socialize, but these are out of reach for low-income residents. The low-income version of tapas and country club was the street, and the regulator foolishly took it from them.

Mass housing might have created an environment more or less equal to the middle-class environment. However, equality is not equity. As a result, low-income individuals found themselves surrounded by opportunities and functions, none of which they could use, with nothing they could do to address the situation.

Ridden with crime and economic decline, 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 (section 42, section 8) and rent control.

Subsidies and rent control

The subsidies approach has major issues. First, it leaves the housing market entirely unregulated, so prices escalate as high as marketing can hold them. If the government keeps breaching the affordability gap, the market has no reason to correct the over-inflated prices. If anything, the market is incentivised to inflate them further. Second, it leaves the residents vulnerable to unstable politics as the subsidies can be cut at a moment’s notice.

As for rent control, it famously does not extend to luxury development, so Profit Machine was quick to put luxury tags on everything, deserving or not, to skirt the regulation entirely. The regulator can’t tell luxury from fauxury anyway.

Finally, neither rent control nor subsidies has the impact and coverage of mass housing. Both are band-aids and half-measures, and Profit Machine is entirely satisfied with the status quo as it scores PR points and inflates profits at the same time.

***

The failure of mass housing in the US (and many similar failures in the UK) doesn’t mean it can’t work. Mass housing is successful in many European countries, with some governments holding as much as 40% of the housing market. We can attribute this success to the superior, inherently walkable urban fabric that naturally repels the Great Lawns and human anthills. That said, it’s not like European countries didn’t try to pull it off. More on that in the next affordability scheme.

Affordable Scheme #4: Vulturing

The architectural profession suffers from the Midas touch. Assuming predominant competency, anything we touch turns into gold, and gold is expensive. I’ve already mentioned that architects can make any dystopian idea look good, from micro-housing to container living. Profit Machine loves us for it, as good-looking stuff is marketable and can be easily sold at a full market price, ignoring our cries of 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? 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 vulture on it.

The amended formula for this affordability scheme is the following.

Learn from and vulture on 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 good design is a correctly identified design problem. The design problem Bijlmermeer identified was the overly-crammed urban fabric of Amsterdam (you surely didn’t mean THE Amsterdam?). For all intents and purposes, the problem was solved as stated. Bijlmermeer isn’t crammed. It is full of great lawns (!), forests, lakes, and it has a clean, modern design—what's not to like? The project renderings still look great, even discounting its respectable age (conceived in 1965).

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 other problems, 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 a place to retreat and hide, such as a generously provided forest nearby, it’s even better. Finally, instead of shops and services on the first floor, always active and therefore creating an observable street, Bijlmermeer had… long-term storage for the units above. Not only did it eliminate all eyes on the street by terminating 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 rate blew up. Middle-class residents whom Bijlmermeer targeted bowed out before even properly settling in. The prices dropped like a rock, 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 low-income residents couldn’t afford to access and pay for the off-site services and amenities. Without local businesses by and for the community, 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, some was destroyed by an airplane crashing into it. Only a handful of buildings remain on the life support of the surrounding successful urban fabric. While a massive screw up, the project provides affordable and good-looking apartments to this day.

There are multiple lessons we can learn from it:

1. Not all pretty designs are good, as they can have a faulty program.

2. Not all ugly designs are bad, as they can have a superior program.

3. Sometimes a problem is actually a solution.

Vulturing

As Profit Machine marches on towards profit, it leaves a trail of dead or underused typologies in its wake.

1. Factories. In the 1980s, as Profit Machine pivoted the US from manufacturing to a service economy, thousands of factories across the country shut down, with some sitting vacant to this day.

2. Malls. The rise of e-commerce is responsible for the fall of malls, with many closing their doors, leaving behind huge buildings surrounded by expansive parking lots.

3. Big Box Stores. Many big-box stores have a built-in limited lifespan, tuned to extract maximum profit out of the neighborhood and exit before the decline sets in, leaving the community with an empty, windowless big-box building.

4. Offices. COVID-19 and the resulting rise of the hybrid work model are responsible for the decline of rental office spaces. While many smaller and medium businesses are gladly removing the rent from their overhead, some larger businesses, still having long leases, aggressively push return-to-work. Nonetheless, the net result is many vacant and underused office buildings.

Each of these situations presents an opportunity for us to create affordable housing. For example, 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 are not run by the residents and lack in services they provide, they are accessible to the residents in under a minute and are mostly affordable.

***

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 vulturing and learning 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 #1: 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 rent, 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: a fast food chain, which shall not be named, rose to prominence through this scheme: owning land under other restaurants, bankrupting them with high rent, then taking them 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, so I’m not qualified to give you legal advice.”

Leasing example #2: relinquished commercial space ownership.

Sometimes, the Mass Housing scheme stumbles into creating commercial spaces on the ground floor. The problem is that the ground floor does not belong to the resident, but to a third party that quickly rents the spaces to the highest bidder. The community rarely comes up with the highest bid, and ends up living over stores and services that they can’t afford to use. After going down the slope of Human Anthill decline, we have a thick mutual resentment: the businesses hate the community for scaring away high-paying customers, and the residents hate the businesses for not providing anything useful for them, except for two minimal wage shifts back to back.

The simple cost-saving move of removing commercial space ownership from the low-income community is the reason why an otherwise good mixed-use typology keeps failing across the US.

Shared Assets

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

• Land Sharing.

  • Whole Plot Sharing. The idea of land sharing created the 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.

    Fun Fact: Shibam, a 2,000-year-old city in Yemen that looks like modern Chicago, managed to side-step this isolation by making all apartments accessible to all residents on the floor. Obviously, it only worked because the culture permitted it.

  • Partial Plot Sharing. For example, a shared backyard. On one hand, you have a platform to party together with your neighbors and build community. On the other hand, you might end up with two private parties on the same day and bump heads. Communication and careful schedule management are key.

  • Easement: Classic pavement. Pavement is a public connecting tissue between the houses. It 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 one wall. A unit in a row housing shares two walls. A unit in an apartment complex shares two walls, a ceiling, and a floor. Any structural sharing creates an odd juxtaposition. You are isolated from your neighbors while clearly hearing them arguing. Therefore, you know everything about them without ever meeting them.

• Sharing Amenities. Sharing public amenities is fairly straightforward, even in a privacy-centric US, but given a chance, we would rather have private amenities. The privacy drive in the US is so strong that we often see higher-income individuals creating smaller, inferior copies of public amenities at home—like a movie room that never shows premiering movies, or a bar where you can’t meet new people. Architects should keep this in mind and always make public amenities worthwhile. Below a certain quality level, residents abandon public amenities in favor of private alternatives at home.

• 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 who borrowed what. Sharing with your roommates (dorm situation), a stranger from the onset, is a big gamble and the most intrusive arrangement, as your different cultures and schedules 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 with scheduling. Cleanliness and residual odors are a huge sticking point. Don’t propose a shared bathroom for more than two individuals unless you have a compensated third-party (janitor) cleaning it. Any soldier assigned to latrine duty will tell you in graphic detail why doing otherwise is a horrible idea.

  • Kitchen. Scheduling and co-use are fairly easy. Asset sharing is less so. Eating each other’s food happens by accident and on purpose. The biggest source of conflict is figuring out who is presently on a cleaning duty.

  • Living room. This is the least conflict-ridden room to share. Conflict doesn’t start there, but often ends there. If a conflict reaches the living room, the police might be called.

  • Ethics 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 culturally homogeneous groups. Don’t offer any sharing without knowing the implications, ideally by experiencing such implications first-hand.

The Great Shuffle

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. 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. The fastest method is to buy them off, but the Machine doesn’t want to offer the market price. Therefore, it buys residents off at below market price, one by one, so they don’t recognize the gentrification process for as long as possible. Profit Machine can’t hide its intentions 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 the Machine just builds 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 shuffle 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 gentrification is. 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 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 situation). The only option is to either sell or rent the property out. Profit Machine then scores PR points 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—a reshuffled low-income community. Sadly, this is the best possible outcome for low-income individuals, as they at least end up with a higher net worth.

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 for “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) by putting a highway right over their commercial street, obliterating it. It set minority communities back in a highly competitive economy, leaving them worse off for decades to come.

Conclusion

As you can see, creating affordable housing is a complicated, deeply frustrating process. Everything works against us. We are dealing not just with individuals and organizations but with the Profit Machine, the system itself that encompasses every aspect of the life of every person in the country. It won’t heed until it sees profit, and affordable housing struggles to produce it.

Let’s summarize all the affordable housing issues we touched on above:

• Value Engineering - normalizing a higher cost for an inferior product.

• Midas's Touch of an Architect - if you do a good job, you make housing unaffordable.

• Lacking incentives - Profit Machine lost its long-term outlook and is no longer capable of recognizing the long-term benefits of any kind, including the long-term benefits of affordable housing. Most affordability schemes get corrupted or destroyed because there is no proper incentive structure in place to keep them around.

• Equality over equity - routinely placing low-income residents in an environment that requires high-income to succeed.

• Cookie-cutter approach - blindness to residents’ needs and cultural background dooms the projects to fail. Even if such projects succeed initially, they create a recognizable “typology for low-income” and acquire a stigma, resulting in residents avoiding them.

• Praying on low-income individuals - Profit Machine hunts low-income individuals as they are an easy target. Most affordability schemes are wolves in sheep’s clothing. From the decline of the secondary market to leasing the land to a third party, low-income individuals can’t seem to catch a break.

The task of creating affordable housing seems insurmountable. Luckily, we have places that can teach us a thing or two—the Slums of Mumbai.

Let’s examine how the slums solve the issues we’ve outlined and use what we learn to develop an affordable housing framework.