This results in a cut-off point, below which you lose the security of a stable, regulated, lodging situation, and are instead forced to operate outside the protection of the law, into a variety of more or less precarious situations.

Everyone has different priorities and aspirations. I personally would have preferred securing a stable space, even if it's closet-sized, than carrying my luggage between temporary accommodations or sharing my living space with strangers. Some people prefer the later options. There's no fundamental reason the basic freedom of having agency over your living accommodations should be denied to those below a certain level of wealth.