Re: State Dept HousingThe situation varies, but because you're an official representative of the USG and your housing is paid for by the State Department, there will be limitations on where you live. You are not a free-lancer on the economy.
Many embassy housing committees do consider the preferences of incoming officers and try to accommodate desires to be in apartments or single-family housing or near the Embassy, etc., but all housing does have to meet certain standards, including security standards. There are some posts with what is called Living Quarters Allowance (LQA), where there is more independence in choosing your housing, but whatever you choose still must be blessed by housing/security experts.
Over the course of my 23-year career, I've been able to live in great neighborhoods most of the time, though my last house was in one of those foreigner compounds. After avoiding compounds for nearly two decades, it turned out that there were some upsides -- especially for those who have children.
So, Foreign Service personnel do not have true independence, but most of us have lived better abroad than we live back here in Washington, and we really miss calling the GSO when the water heater explodes here!