I think you missed the point of the meme and then argued about a common, tangentially related topic, which made it sound like a strawman argument. Because you seem to be more genuinely confused as to my response than arguing in bad faith, I'll drop it. Those types of dismissive comments are meant for people arguing in bad faith.
The image is not attacking urban sprawl, it's attacking the very mindset that you displayed in your comment: "why do I have to choose between these two things? I hate living in apartments, so why would you force me to do this?"
The meme is showing two different approaches to dealing with a massive housing crisis where many people did not have access to housing. In the first image, we see how the USSR dealt with it: they needed more houses for people, so they forced families with homes to share with those without until new homes had been built. The government subsidized the construction and focused on building economical housing that functionally fixed the problem, but at the expense of luxury and some comfort. Would people have liked more space? Yes. Was it reasonable to accommodate that want before the needs of people without housing? No.
The lower image is showing how the US has handled a massive housing crisis...it hasn't. If someone can't manage to find and/or afford to house themselves, they choose to force those people to live on the streets. The thought process is more individual focused rather than community focused as in the top image. "Why should the people who have houses be inconvenienced by those who do not?" This assumes that those without have some type of moral or personal failure that justifies them having nowhere to live rather than the situation being a result of a system that does not prioritize human needs. It rests on the callous assumption that people do not deserve a place to live, but they instead must earn a place to live.
As to your argument, I don't think you offered a third option so much as a complaint about the state of the things. To be honest, I agree with your complaint. Assuming the context of your comment was focused on the US, there is plenty of space for people to live in larger homes and there isn't some false dichotomy where we only have the options of urban sprawl or dense apartments. The problem with how you approached the problem is that without further analysis of why a housing crisis exists and how we can eliminate the source of the problem, saying "just build more medium-density housing" equates to no more than a complaint.
You cannot fix a problem unless you address the root of the problem. Pushing the homeless out of sight does not fix the problem. Much of the problem is caused by our economic and political systems, but there is also the influence of the cultural aspect in how we think about the problem and how we think about people (individualistic vs collective focus). When you focus on yourself and how the problem affects you, it is often at the expense of other people. For the people this hurts and the people cognizant of the cultural influence, seeing individualist-focused complaints really rubs them the wrong way.
Why do you think people are living this way? Do you think it's personal failure or maybe desperation? Where else do they have to go? If you tear down the buildings but don't address the root problem, do you think they will just stop existing or will they be forced to find a new spot to live? Were these places always this way? What would you like me to call them?
Please continue making assumptions about my personal life and deriding me for my choice of words rather than contributing something useful. I try to meet people where they are at, which means speaking to what they know. In this case, you seem to know the symptom, but not the cause.