[ZenGum]

We have enough land, mostly, to do that.
In South Australia, the government organisation, the Housing Trust, builds regular (maybe a bit smallish and cheapish) houses which are rented out to people at social and income disadvantage. These houses are scattered amongst regular suburbs (although not the more expensive - aim for cheaper land). The residents usually stay long term, and many eventually buy the house from the government.
By and large, this avoids or reduces the problems associated with big "projects". There are still some bad neighborhoods, and the housing trust tenants are frequently involved, but nothing on the scale of the projects in US cities.