I wouldn't say the housing market in Ann Arbor has a fair bit of choice. The vast majority of undergrads live in frat style 7+ bedroom houses. There really aren't a huge number of 1 or even 2 bedroom apartments available, and what does exist is either incredibly run down or 2k+ a month in a high rise building that grad students can't afford.
North campus has better 1/2 bed options, but only engineering and art students would be there.
It's super frustrating when people take a phrase, change its meaning by removing it from context, and then nitpick it.
That the choices are ones you don't like doesn't mean they aren't choices. The people who live in Munger all did so voluntarily, meaning that they're going to be the people who were most likely to be ok with Munger's limitations.
Is your claim based on the assumption that it has to be within walking distance of campus? It's been awhile since I lived in the area, but I never had issues finding a reasonable student apartment if you were willing to bus/bike/commute in
North campus has better 1/2 bed options, but only engineering and art students would be there.