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 the main cause of homelessness is a lack of affordable housing. But what causes the lack of affordable housing? What does it take to create affordable housing? In part 1 of this research, we will explore the current state of affordable housing, existing schemes, and the challenges they face.

Profit Machine

The topic of affordable housing sits in the thick shadow of the economy and politics. To address both without getting bogged down, I created a diagrammatic abstraction of our political and economic system. I call it Profit Machine. Like an architectural diagram, this abstraction lets us see the bigger picture behind the distracting details—in this case, politics, emotions, and the conduct of individual market players. I will be addressing the Profit Machine as if it is alive for the sake of narrative simplicity.

The Profit Machine will be a tool we use to test present, former, and proposed affordability schemes, predict their outcomes, or understand outcomes that have already happened. The key to Profit Machine’s function is the following thesis:

Good intentions always lose to good incentives.

Also, I won't dive into the nature of low income. From Profit Machine's standpoint, the low-income position exists because it is needed, or it would have been liquidated. I don't consider encouraging people to move from low to higher incomes a valid solution to affordability. Someone else will fill the vacated low-income position because it is still needed, and we'll be back at square one.

With that in mind, let's discuss affordability schemes.

Affordable Scheme #1: Value Engineering (VE)

Some might think that the solution to affordable housing is trivial: VE. Architects are no strangers to cutting costs, as seemingly every project is over budget. The formula of affordable housing under VE is as follows:

Affordable = slash cost.

This scheme assumes that savings would be passed to consumers. However, with zero incentive to do so, the cold logic of the Profit Machine rejects this idea, sells VE property at full market price, and pockets the savings. To pull this off, Profit Machine spends some of the savings convincing the customer that no cost was cut during construction, an activity known as marketing.

The result is housing built as affordable and sold as luxury. I like to call it fauxury. The common and most prominent example of fauxury is a five-over-one: five stories of wooden housing, one story of concrete marketing.

• One. Charming people into overpaying requires a performance. Therefore, the ground floor is a theater space, and amenities are set pieces. The lobby, the first and last thing newcomers see, is the set piece closest to true luxury. The rest is designed to appear luxurious in passing from a certain angle. For example, a gym is a common set piece. The equipment closest to entry is new, there rest is used or broken. A smart move is to have a Yoga studio, which requires no equipment and asks you to bring your own mat. Set pieces, as faux amenities, are annoying enough to be scarcely used and preserve their appearance for the newcomers.

The “one” often includes large rental commercial properties aimed at medium and large businesses, which are more stable and sign longer leases. On the flip side, this move excludes small businesses, the only type done by and for residents.

• Five. A point where the theater stumbles. A windowless den insists it's a bedroom. Laminate floor insists it's hardwood. The forgiving-to-errors wood-frame construction stretched to the limits of its patience, with crooked walls apparent to the naked eye. Low ceiling, single small window. Neighbor on the right sneezed. Neighbor on the left said, “Bless you.” The chirping of birds can be clearly heard through the tightly closed windows. Marketing term "luxury micro living" falls flat. The residents promptly ushered back to the lobby, to end the play on a high note and maybe pepper it with discounts.

To dodge the issues I mentioned, you can have a set-piece apartment on the first floor, fill it with distracting commercial-grade furniture, and even throw in an extra window somewhere. A set-piece apartment is a must if your building has no elevator. The moment a newcomer climbs a set of stairs and imagines dragging a couch up them, the luxury pitch is over.

Let’s revise the formula of the scheme to something more accurate:

Affordable = fauxury - marketing.

AKA five without one, where we are left without theater to soften its impact or a poorly built structure. Theater is life, and life without theater is no life at all. The residents of such housing become resentful and disengaged. Also, even without theater, such housing is still too expensive, and subsidies must bridge the gap.

There are more considerations:

• Unintended consequence of VE. VE normalizes substandard housing. Every time Profit Machine sells VE housing at full market price, it becomes the new market norm. Profit Machine sells Architects' cost-cutting innovation easily because it comes wrapped in great marketing visuals. As such, microhousing, once thought to be the solution to affordable housing, is sold at a cost of a full-sized house from a decade earlier. A den, created by rotating a floor plan 90 degrees so only the short side faces the exterior, is now sold as a bedroom even in true luxury developments. The list goes on. As an exercise, compare a 1960 apartment layout to what is offered today. The decline in space quality is obvious.

• Affordable isn't cheap. The premise that "affordable = cheaply built" is problematic, because low upfront cost often leads to high lifetime cost. Under such a scheme, even though we provide housing to low-income individuals, we undercut them financially in the long term and leave them worse off. Profit Machine likes to prey on low-income individuals. A classic example is an "under a dollar" store, where the per-item price is low, but the per-ounce price for the same items is high, so you don't feel the impact now, but definitely feel it later.

Affordable could and should be built with a higher upfront cost today. In Profit Machine, you can do it, as long as you can recover the upfront cost later in some way, for example, TIF (Tax Increment Financing), which I will cover in a moment. In other words, affordable housing doesn’t have to be value engineered to death.

Conclusion: VE, while inevitable, is dysfunctional as the main design intent, fails to deliver affordable housing long-term, and undermines space quality over time. For the scheme to work, we need a typology that is naturally resistant to marketing ploys.

I believe I’ve found it. I'll outline it in the later chapters.

Affordable Scheme #2: Secondary Market

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

Affordable = 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 accumulate. This starts to deflate the profit margin, creating an incentive to forgo some 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 further reduces profit margins, which in turn reduces the 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.

The scheme functioned well for decades, effectively utilizing the worst impulses of some property owners, and the luxury apartments of old have become affordable housing. However, in recent times, the scheme has been disrupted by build-to-sell and buy-to-sell schemes. Build-to-own, the classic scheme, has been in decline, especially after the 2008 crisis, which caused a large exodus from the architectural profession and left the market wide open for other schemes.

Build-to-Sell

Unlike in build-to-own, in build-to-sell, Profit Machine holds the property short-term and has no incentive to worry about longevity and maintenance fees. 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. Devoid of a long-term outlook, they are incentivized to cut as many corners as possible during construction, 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 bypasses affordable states and becomes derelict, 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 cycle.

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. The classic scheme is 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.

Conclusion: The secondary market, while a valid source of affordable housing, has been disrupted by build-to-sell and buy-to-sell models that use affordable housing as fuel.

Affordable Scheme #3: Government

GOVERNMENT

The government is a unique cog in the Profit Machine (some consider it an independent entity) and has the following unique properties:

• Market-wide span. Government spans the entire Profit Machine and touches every market sector, allowing it to take losses in one sector to boost profits in another. As such, it doesn't take losses as charity and is subject to the same fundamental principle as any other entity in Profit Machine: pursuit of profit.

• Largest size. Government is the largest and most powerful entity in Profit Machine (most of the time). Because of its size, it has influence over all other players, allowing it to negotiate prices from a position of strength. Its size also makes it a regulator that sets rules for all other entities.

• Longest outlook. Government has a unique ability to stockpile losses for decades in the form of national debt, in favor of returns decades in the future. No other entity has the patience or resilience to do this.

• Omnipotence. Government reaches every person one way or another. Therefore, it has a wealth of data it can use to make informed decisions.

These properties make government uniquely capable of addressing affordable housing. It does so in three major ways.

GOVERNMENT AS REGULATOR

• Subsidies. If the government keeps bridging the affordability gap with subsidies (Section 8, Section 42), Profit Machine has no reason to correct overinflated prices. Moreover, Profit Machine is incentivized to inflate prices further. Also, subsidies are subject to volatile politics and can be revoked at a moment's notice, putting people at risk of homelessness.

• Regulations. When regulations are punitive, they create a powerful incentive to weasel out of them rather than follow them. For example, rent control regulation where Profit Machine found a loophole: rent control doesn't cover luxury housing, so it designated everything as luxury. A good regulation is opportunistic. For example, giving Profit Machine an opportunity to develop an otherwise unavailable plot of land only if it keeps a certain percentage of units at a reasonable price. It will still try to be a weasel (and it will never stop trying), but there are far fewer incentives to be a weasel, so the regulation has a higher chance of success and less loophole exploitation.

• Incentive Aligner. A rare breed, but it exists. Being a good politician in the US means aligning dissimilar incentives. Bad politicians elevate one group's incentives over another's. That's why tax breaks have a terrible record (developers over residents), and so does punitive legislation like rent control (residents over developers). In the end, developers want money; residents want nice places to live. Those incentives don't point in the same direction by default. That doesn't mean they can't be. Mechanisms such as Tax Increment Financing (TIF) can encourage (not force, important) developers to build at the quality level the public needs. In short, the government gives money to developers for quality improvement that it then makes back with higher taxes: for example, compelling the developer to have an underground parking lot instead of a surface parking lot.

GOVERNMENT AS OWNER

In a Scandinavian model, the government simply buys a large share of a housing market, including a share in all typologies, neighborhoods, and scales, which acts as a cooling pad across the whole housing sector. You can't price-gauge when an identical, cheaper alternative is next door. The housing government holds is profitable, as it is market rate. Although successful, I don't see any path for this scheme to deploy in the US, where Profit Machine logic is at its purest.

GOVERNMENT AS DEVELOPER

In another model, the government directly develops, then owns a large volume of affordable housing at a loss to boost profits in other market sectors.

Fun Fact. Some private companies, notably Japan Railway Group, use a scaled-back version of offset losses scheme. Public transit is a chronically unprofitable endeavor. Any increase in ticket cost will simply drive more riders towards buying a car. In response, Japan Railway Group pivoted to real estate, correctly reasoning that a train station brings in people and drives up surrounding property values. 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.

At first glance, the government properties make it a powerful and effective developer of affordable housing. It can negotiate or set prices outright. It can pressure all vendors to comply instead of doing VE. It can stockpile losses indefinitely. It has a long outlook, so it builds robust housing that has minimal maintenance, solving one of the key drawbacks of VE scheme. Also, it has the most comprehensive market data, so it can target neighborhoods where affordable housing is needed most.

However, every strength is a tail end of a weakness.

• High density. The government, as a big entity, prefers large, high-density projects: megatowers, mega blocks, mega everything. It lets the government create many units on the same site at low cost. However, high-density projects are a bad programmatic fit for low-income residents, as I will show later.

• Cookie Cutter solutions. The government, a system-spanning entity, prefers a one-size-fits-all solution that fits no one in particular. It lacks the granularity of thousands of other market players, each doing their own thing. This creates instantly recognizable "council housing" which people avoid, because "I'm not poor, they are poor." Worse, the government chronically lags behind the market, therefore creating projects that are programmatically out of sync with people’s needs.

• Ideology. The government is often tainted by ideologies and biases, which distort its perception of who uses affordable housing and what to do with them.

As a result, the government keeps developing the Projects, aka Human Anthills.

Human Anthill

A Human Anthill is a generic, uniform apartment complex, stacked into a single tower or arranged as multiple smaller blocks. 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 socialization and community-building to the street. This could work if the following conditions are met.

• Quick access. The longer the access time to the street, the more the residents will avoid the hassle of going down.

• Something to do. There must be a robust array of activities. Breathing fresh air is not a valid form of entertainment.

Sadly, Human Anthill always falls short.

• Tedious access. Residents above floor five have no connection to the street and won’t go down unless they absolutely must. Getting to the street is almost a five-minute trip: a long hallway, waiting for an elevator, taking it, and exiting the building. Five minutes sounds like nothing once, but over time, residents begin to avoid the hassle entirely. Another way to access the street is a fire escape, but the residents are actively discouraged from using it outside of an emergency: it is dingy, utilitarian, and offloads you next to garbage cans.

• Nothing to do. Even long access time can be tolerated when there is something to do on the street. However, the first floor of Human Anthill is occupied by apartments instead of businesses, to maximize the number of units (or, perhaps, because government can't fathom low-income residents as business owners). As a result, local businesses by and for the community are missing entirely, and that's a crucial connective tissue. If businesses aren't local, residents must spend their limited time and money to reach them. If they aren't for the community, the community won’t use them or will be priced out. If they aren’t by the community, the revenue they generate will leave the community, which a low-income community can’t afford.

In Human Anthills, a perennial substitute for businesses, services, and a vibrant street life is the Great Lawn. It is a massive green, functionless area that is for everyone (aka no one). Residents can frolic through it and play frisbee, but it gets old quickly. It’s not long before the Great Lawn gets abandoned.

• The dynamic of the human anthill. With no reasons to engage with the Great Lawn, no sense of community, residents boxed into individual, undersized units, a lack of easy-to-access services and amenities, and no economic opportunities of any kind, the situation in the anthill turns sour. Economic decline, escalating crime rates, and even emerging gangs (subverted community) are typical and entirely natural outcomes. The only positive outcome of the Projects was platinum R&B albums about the struggles of growing up there.

• Equality is not Equity. Human Anthill can be successful at a certain income level (as any faltering typology). Indeed, if we assume that residents have the time and money to get and do everything they need off-site, the Human Anthill is perfectly fine. This creates a situation where a low-income human anthill struggles and fails, while a middle-class human anthill with an identical program survives. We should never confuse equality with equity.  Affordable housing programs shouldn't demand the means to succeed that residents don't have.

• The outcome. Ridden with crime and economic decline, affordable human anthills turned into blight one after another. Other cogs in the profit machine despised affordable housing alternatives from the get-go and wasted no time stomping them into the ground. The government withdrew from the housing market and resorted to regulations and subsidies, with limited success.

 ***

Conclusion: The government is a powerful entity capable of creating affordable housing, cooling, or otherwise regulating the housing market. However, workable government involvement schemes are unlikely to take off in the US due to a harsh political climate and deeper integration of the government into the Profit Machine. In the following chapter, we will discuss another entity that could fill the affordable housing void left by the government: religion.

Affordable Scheme #4: Project Failure

In the VE scheme, I mentioned that Profit Machine likes to take our cost-saving measures, use our renderings for marketing, and charge full market price, ignoring our cries of displeasure. The architectural profession suffers from the Midas touch: anything we touch turns into gold, and gold is expensive. Midas’ touch makes us uniquely incapable of making anything affordable. Therefore, the formula for affordable housing could be the following:

Mess up.

Should we do a bad job on purpose? Should we do a reverse Midas touch? Of course, we shouldn’t fail on purpose, and we don't have to. Occasional failure is inevitable (yet always 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, learn from it, and take advantage of the opportunity it creates.

The amended formula for this affordability scheme is the following.

Affordable = utilizing and learning from failure.

LEARNING FROM FAILURE

To prove that nobody is infallible, let’s examine Bijlmermeer—a rare example of Dutch urban failure. Like 95% of urban failures, it has its roots in modernism. Modernism believed that the old urban fabric, created and improved over 11,000 years by people who lived in it, was bad and that they could do better. Bijlmermeer boldly sought to improve Amsterdam's urban fabric by discarding it and replacing it with an apartment complex surrounded by artificial wilderness. The ground floor, where businesses should have been, was replaced with long-term storage, implying that the residents should work and play elsewhere. The design problem the project was solving was excessive density, intermingling activities, and lack of greenery. The design problem was solved as stated. The project looks sleek, even discounting its respectable age (conceived in 1965).

However, designs rarely fail because of aesthetics—plenty of enduring ugly buildings. All designs fail due to programming. While solving density, the project broke safety. No eyes on the street, storage units on the ground floor, and plenty of places to hide in artificial wilderness created the perfect program for burglaries, robberies, and assaults of all kinds. The issue of raiding bandits the urban fabric solved millennia ago came back with a vengeance.

The crime blew up. Middle-class residents whom Bijlmermeer targeted ran in all directions. The prices dropped like a rock, became affordable, and low-income residents moved in instead. With the target demographic gone, all middle-class assumptions about Bijlmermeer became moot. Low-income residents struggled to access work and pay opportunities off-site and couldn't create them locally. Bijlmermeer was set on the path of Human Anthill, turning into a blight.

The project's fate was predictable. Most of the Bijlmermeer was torn down, and some was destroyed by an airplane crashing into it (irrelevant to program failure, but it felt wrong not to mention it). Only a handful of buildings remain, supported by the surrounding successful urban fabric. While a massive modernist screw-up, the project still provides affordable, good-looking apartments today.

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. Remember that architecture is only half aesthetics (or it's a sculpture). Another half is program.

4. Sometimes problems you solve are solutions to other problems.

5. We will be dealing with the legacy of modernism for the rest of our lives.

UTILIZING FAILURE

As Profit Machine marches on towards profit, it leaves a trail of failed buildings and typologies in its wake, not because they were badly designed, but because they outlived their usefulness.

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 still sitting vacant today.

2. Malls. The rise of e-commerce drove the fall of malls, with many closing their doors and 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 driving the decline of rental office space. While many small and medium businesses are gladly removing rent from their overhead, some larger businesses, still under 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. 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 residents do not run the businesses, and the services they provide are not comprehensive, they are accessible within a minute and mostly affordable.

Conclusion: Failure presents endless opportunities to learn and structures to harvest for affordability.

Affordable Scheme #5: Reduced Ownership

Once Architects squeeze all they can with value engineering and the building stubbornly remains unaffordable, we get creative and enter a minefield of the reduced ownership scheme.

This is a whole family of schemes, all starting the same way: we reduce or take away ownership of an asset that normally belongs to a resident, reducing the cost. Then, we either make the asset 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 waits patiently as the community develops and property values rise. 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, letting them develop, 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 tightrope. 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’m not qualified to give you legal advice. You should get a lawyer to understand the contract.”

LEASING EXAMPLE #2: relinquished commercial space ownership.

Sometimes, the government housing 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 the Human Anthill decline, we have a thick mutual resentment: businesses hate the community for scaring away high-paying customers, and residents hate the businesses for not providing anything useful, except two minimum-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 (superblock) 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 can lead to programmatic failure.

Land Sharing.

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

  Fun Fact: Shibam, a 2,000-year-old city in Yemen that looks like modern Chicago, sidestepped 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 independently scheduled on the same day, resulting in a conflict. 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 house 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 for private alternatives at home.

Room Sharing.

• Bedroom. Sharing with your partner is pretty effortless, though disproportionate closet space allocation might be an issue. Sharing with your siblings will likely create a DMZ at some point and endless conflict over who borrowed what. Sharing with your roommates (dorm situation), a stranger from the outset, is a big gamble and the most intrusive arrangement, as your different cultures and schedules collide. Also, if you have different ideas about terms like “clean” and “quiet,” the arrangement will likely blow up.

• Bathroom. This has the same concerns as the above. The door lock 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 currently on cleaning or dishwashing 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 can 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, as it only works with culturally homogeneous groups. Don’t offer any sharing without understanding the implications, ideally by experiencing them first-hand.

Conclusion: Reduced ownership is a powerful toolset to create affordable housing, but it is ridden with pitfalls and requires great precision to be effective.

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. 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. For example, a firm is moving from CA with several thousand employees, so the Profit Machine gentrifies the neighborhood ahead of their arrival, greeting them with prices they know and love. It uses a variety of shuffling techniques, depending on the situation, which we 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 a 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 it buys off the last bunch at 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. Profit Machine negotiates the purchase with the landlord, then tenants learn 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 Profit Machine promises the community will remain in place, just in a better-looking building. Residents get new apartments, and businesses 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 (an 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, the largest cog in the Profit Machine, wants to build something epic, like a freeway network. This creates a problem: acquiring vast amounts of land from many stubborn owners. When the government tries to build a freeway through a wealthy (caucasian) neighborhood, it encounters aggressive, well-funded resistance. Following the path of least resistance, the government turns on low-income neighborhoods (minorities) as they put up less of a fight, and it has centuries of experience subduing them.

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. The situation prevails as of 2025, with the latest example of highway expansion in Houston, Texas, that predominantly displaces low-income minority communities.

Conclusion

As you can see, creating affordable housing is a complicated, 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 us until it sees the highest profit, and right now it doesn't see the value in affordable housing. We can change that.

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.

• A 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.

• Preying 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.

Therefore, the solution must obey the following core principles.

• Long-term outlook. Normalize reliable, resilient, long-lasting housing that minimizes maintenance.

• Strong Design. The solution should not limit design excellence.

• Strong Incentive Structure. Establish strong incentives for building affordable housing.

• Equity over Equality. Understand the limitations of low-income communities and provide ways to overcome them.

• Ongoing Innovation. Profit Machine is a dynamic entity, so a solution for affordable housing must be similarly dynamic. What works today may not work tomorrow. It is like a flu vaccine—it must be applied seasonally to be effective.

• Defense. Provide tools for low-income communities to defend themselves from hostile market players.

The task of creating affordable housing seems insurmountable. Luckily, we have places that can teach us a thing or two—the Slums of Mumbai. Without further ado, let’s explore the urban fabric created by and for low-income residents.