If the health situation is bad enough, it's just making externalities via health risks for everybody those residents interact with, since they're now vectors for whatever diseases crop up.
Unless the health risks are greater than those for homelessness, we shouldn't care.
Absent additional research, my prior is that homeless disease vectors are probably worse, since people in that position have fewer shelter options from the elements and more direct exposure to the public.
Houses don't have to be perfect, they just have to be better than what we have right now. I mean, even in a bad situation... there are rats on the street. It's very difficult for me to imagine someone in that condition looking at a house and saying, "no, the street is cleaner."
