A lot of people do want to live there. There is a significant university, and all of the things needed to support it (like grocery stores). There's a well-developed water taxi service. It's been a real place to live for centuries.

It's an idiosyncratic place to live, to be sure. They even seem content to live with the acqu'alta, the regular flooding. The houses are set up with barriers that prevent water, up to the height of about a foot. Any higher and the pressure would risk collapsing the walls, so they just let it in and clean up. Not pleasant, to be sure, but there are plenty of people who would put up with it to live in such a charming, beautiful city.

It really is the tourists that push it over to "unlivable". They massively outnumber the residents, especially during the summer. It's actually not as bad as you might think in the many parts of the city that the tourists don't go to, but you have to pass through them.

It might be AirBnB that really ends up taking it out. Whatever you'd pay to live that life, somebody else will pay more to spend a night in it.