It changes the allocation of resources. Let's play with some numbers.

We will say that 5 people have the following monthly incomes [ 0, 500, 500, 2000, 3000, 4000] Our economy only makes one good: bread. There are 1000 loaves of bread produced. Assuming everyone spends all of their money, since there is a total of 10000 dollars, the price of bread will be 10 dollars. Each person can buy = [ 0, 50, 50, 200, 300, 400]

Now, let's say in 2016, everyone gets 500 extra dollars from some outside source, giving incomes [ 500, 1000, 1000, 2500, 3500, 4500] There are now 13000 dollars. The price of bread will be 13 dollars. Each person can buy [ 38, 76, 192, 269, 346]

Some people can buy more bread. Some can buy less.

IANAE and would like to hear an expert's answer as well. But as far as I can see, the demand for basic food and shelter is not elastic, people need roof and bread always. And the capital is mostly reallocated from existing subsidies, not created. With UBI, prices for non-essential goods and services would maybe increase a little, and there would be a revolution in employment market, but my guess is that potatoes and basic accomodation prices would stay low.

I think basic income is a bad idea, but if you liberated people from seeking jobs, many of them wouldn't live in overcrowded cities. If rent is too high in the bay area, you'd go live in Madison, Wisconsin. Or in a pre-fab house in the middle of nowhere.

In the context of a thought experiment, where people would live is an interesting question. There are certainly many places today that are inexpensive in no small part because there are few jobs. It doesn't have to be in the middle of nowhere. Detroit qualifies too. On the other hand, moving somewhere cheaper would imply moving away from existing family and social support structures.

However, I suspect a lot of the people who are championing basic income are implicitly envisioning living in a relatively comfortable apartment in the Bay area from which they can follow their muse--not public housing in Detroit.