I hear a lot of accounts of relatively-normal people who talk about one member of their family who is homeless and living on the streets because they stopped letting that family member live with them because they did things like violently attack children in their home, or steal money in order to buy drugs. So this makes me think that a lot of visibly homeless people were in fact dysfunctional before they became homeless.

And this is relevant for any institution at all that tries to house such people, including the state. If the state provides some kind of basic housing with electricity, what happens when the people living there rip wires out of the wall so they can sell the scrap for drug money (a major reason why most landlords don't want to rent to really poor people)? Will someone prevent them from doing that (i.e. institutionalization), or will the state itself evict that person from their housing and allow them to live as a homeless street person?