But if the person can't follow the social norms required when being housed they can't succeed when they're provided housing. I see this in my job right now.

Street people norms are not the same as housed people norms. Talk to homeless folks and they can explain the differences.

Living on the streets often leads to violence, robbery, rape, prostitution which is sometimes worse then being institutionalized in some cases. We haven't even eliminated institutionalization either. If you look at long term care homes (congregate housing for adults) those individuals are often considered lucky because their other option is living on the streets. It is also pretty difficult to get qualified for those services. :(

Granted none of this is perfect or ideal, but the world is not black and white like they teach in schools.