my suggestion is to maybe fix the process of upgrading houses. when upgrading a house the residents are left homeless for the time being until the upgrade is complete, for me, the residents usually die before that ever happens, unless i assign 8 or so people to build the house quickly which i might not have at the time to spare. so what i suggest is, using the hostel strictly for homeless people instead of just a place for a mass of people to stay when there are plenty of houses to live in.