Poor people live where they can afford to, however they can. In trailer parks, in a tent, in a log cabin, however they can. Even knowing that someplace is likely to flood again, someone will choose to live there. For someone who has a minimum wage job, no savings, and with most houses costing a significant fraction of a million dollars, they don't have the choice to live in a floating sky castle or 20,000 leagues under the sea or on a moon colony, so they'll choose to live even somewhere where life is difficult.

Agreed though that people should not pay the full asking price for such a place, as if it would not flood, that is... probably happening, but not wise at all.