Yes, but the idea is that UBI money still spends, and there’s still overall much more money than that in the economy, so there should be a floor for the housing and food that a UBI will buy you, even if housing and food use up most or all of it.

Kind of like how increasing a rocket’s size increases its fuel need increases its size some more, anyone implementing UBI needs to make logical guesses about the amount of inflation and knock-on effects and try to accommodate them, but the idea is to make sure no one is flat broke and starving even if it doesn’t really lift people out of poverty directly. SOMEBODY will fill the market niche for people seeking housing and food on UBI, and it will be up to the government to ensure they meet minimum health standards and to incentivize/mandate enough of it. Also, any UBI system probably also needs to have a very graceful downward curve (if you have one at all) as other income increases, so that people will be willing to work to supplement it rather than fearing that they have to choose between UBI and backbreaking labor in exchange for “UBI plus a dollar.”

UBI is not a magic bullet, but it is a sort of quick and dirty social safety net that inserts the government’s money into the system without the political and administrative overhead of running housing etc. programs itself. Theoretically that might mean things happen more efficiently, and if it’s more than the literal bare minimum to live then it also affords a certain amount of agency to the people on it to use their remaining resources how they see fit, but it could go really wrong too. You still need regulation and the power to adjust amounts to ensure that the UBI people receive is adequate for the intended purpose, and a bad UBI program could be run in a way where a government uses it as an excuse to simply abdicate any further responsibility for its people’s well being.