Transportation cost is higher thanks to poor infrastructure. Rent for a single bedroom is higher thanks to poor zoning/building code regulations.
A 1 bedroom in my immediate are rents for @1800/month. Go 5 miles down the road and the same space rents for $1000-1200/month. Differences? "Desirability" "newness" "better schools (which makes no sense if you don't have kids" "atmosphere (I read everyone looks like me)"
You can go into some older areas of the city and find rents below $800/month.
Perhaps because “you” value morals other than “make the most money I possibly can”? Or you want to provide housing that’s affordable by those who do the blue collar, nearly-minimum-wage work that powers our modern cities?
Profit isn’t everything. I’ll even go so far as to say that the current expectation to get “maximum profits at any cost” is a (“The”?) driving factor in the problems we lament in our society.
Let's consider why older housing is so much cheaper for a second.. Property tax isn't recalculated until you update the building or rebuild on the property. So it's a huge disincentive to ever change any buildings, split lots, etc.
$800/m is still precarious for roughly twice minimum wage. Food is also more expensive and harder to get to in less upscale areas of most cities.
Suffice it to say, these situations are far more common in cities than the ones you've described.