From my eastern block friends they are very confused how the USA could have allow homelessness

Yeah, looking from the outside, the USA seems like it's in a mess that it needs to fix.

but they do talk about how everyone at least had a home and some standard of living - where it seems the standard of living is higher in Western countries.

It is easy to look back at worse times in the past with pink glasses of nostalgia... Yes, everyone did have a home, but the standard of living was piss-poor - except for people with connections, who had it much muuuuch better, like my aforementioned grandparents.

I'm from one of the Baltic states, and honestly the standards of living now are much better for the vast majority of people than it was in the USSR, even for minimum wage earners.