It's too expensive to live in - with most nof the properties having been converted in to hotels. The city is just a tourist haven with those who work in the hotels and business catering for the tourists living in the suburbs and towns around venice where property prices are very much lower and where there are roads to enable car ownership unlike in venice itself.
As for flooding, the city has embarked on state of the art flood defences.
http://www.telegraph.co.uk/news/worl...of-Venice.html