Squatting definitely limits your property rights. Imagine that if your backpack is vacant for some time, and someone put tacitly someting into it, you'd be legally obliged to carry it around.

I suspect that squatting rights only affect obviously neglected property. I suppose the empty houses and apartments are reasonably guarded and are not as neglected as a closed and half-dismantled building. Also, squatting does damage the property, hopefully in minor ways. Imagine that your empty backpack was loaded with pizza slices: totally benign, but you'll have to clean the backpack thoroughly.

Yes squatting is absolutely incompatible with property rights. As are eminent domain and zoning.