I live in an apartment complex with a lot of Muslims and Indians. They kind of just avoid my dog. They don't approach but they don't freak out either. I usually see mom's grabbing their curious kids in order to prevent them from coming to my dog, but this is either the religious thing or just their own fear that they will now spread to their children.
As to why they would live here? Great location, great price, and a lot of things in the apartment that you can't find for the same price. So what that they have to deal with a dog walking around every once in a while. They know I control my dog and wouldn't allow anything to happen, I'll walk off the sidewalks when they walk by, and they have thanked me for it (not allowing my dog to sniff/say hello). If someone has a really irrational fear of dogs...whatever. I have an irrational fear of heights, I won't ever live in a skyscraper, but that's my choice and I have other options lol.