Housing is the biggest part of most US household budgets. Unfortunately, in many areas of the country the supply of rental housing doesn't meet demand; what is available is crushingly expensive for lower-income folk. With mortgage interest rates so low, it's actually more affordable to own than rent - that is, if you're able to qualify for a loan and have something for the down payment. Which leaves out a lot of people.

Residential hotels used to fill a niche: an alternative to homelessness for the down-and-out. If all else fails, you can get a room, with a shower down the hall. But building residential hotels is a low margin/high hassle business and they just aren't being built like they used to be.

Enter Prefabricated Affordable Dwellings, such as:

Design by Panoramic Interests http://www.nbcbayarea.com/news/local/Berkeley-Considers-Prefab-Micro-Units-to-House-the-Homeless-413802243.html 

That's 8 feet by 20 feet: bigger than most units in a residential hotel. Plus it has a bathroom with shower, protection against bedbugs,  and drains in the floor for hose-downs.  And a big window for lots of natural light. According to the developer for this particular model, it could be leased for $1000/month in the San Francisco Bay Area. I'm guessing the cost would be less in most other regions, where labor isn't so expensive.

These teeny units would mostly be for seniors, the disabled, and the homeless, many of whom probably can't afford $1000/month. So let them be subsidized, in whole or in part.  It's still cheaper than a lot of other programs for housing the homeless or near-homeless. San Francisco already pays $30,000 a year for one bed in an alternative shelter.

Another nice thing about these modular units is their scalability. Pre-assembled in China, installation is fairly straightforward. You could have 100 units or more in one complex. And the units themselves can be made bigger to accommodate couples and families.

Here's one example of a modular apartment complex:

The private and public sectors working together to make the world a better place. Doesn't always work, but when it does, it's beautiful.