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You explained what I asked :)

But what happens when I don't build houses for my people?
Because when you don't have houses, you don't need much food. Or is this a thing that you are working on with the happiness thingy?

Eventually it will tie into happiness, but right now it just affects the homelessness percentage.

Also it affects how you can sleep at night, knowing your poor citizens are hungry and cold, sleeping on the streets. :P