There were several different types of dwellings, including adobes, straw roof homes, and other sorts of houses, at the very edge of the city; these had to be the farm residences on the outskirts of the city.
As as I really approached the palace that Alex was standing on, the surrounding buildings became increasingly opulent in both their architectural design and the materials that they used.
The wealthy people evidently lived in places that were closer to the palace, while the less fortunate people lived in the outskirts of the city.
Alex observed that the city was built on multiple levels, the outskirts being the lowest level of all. However, the closer one got to the palace, the higher one had to climb in order to reach it.