I think the problem is when people are incapable of grappling with their demons even in the privacy of their own homes. If given a place to stay, many people _choose_ to use it for non-productive things. Surely, exploding housing prices make things worse, but it's also easy enough to see why productive members of society want to distance themselves from this destructive behavior. After all, even the excellent shelter that you claim for NYC doesn't really seem to have resulted in paradise.