Because they were literal shitholes in decrepit buildings who had loooong histories of viciously abusing their residents.
The problem was they needed to be shut down, but first local supports needed to be put into place for them. Instead Reagan just booted people into the streets with zero money, zero training and zero supports. This was the start of the massive unhoused population increase you see playing out today.
Btw the same thing happened at the same time in Canada, because we had a right-wing gov’t who was Reagan’s lapdog.