This is one of the complaints I've seen the most about AQP, one that I think is very telling to the level of nit-picking we're talking about with the complaints about how the holes/implausibilities "ruin" the film, because the answer to it is so incredibly obvious, to the point that applying just 10% of the same scrutiny to it that has been directed to the film itself instantly invalidates it:
They can't live next to the waterfall because they have no long-term shelter there, and living there would entail setting up some sort of temporary set-up, like say, a tent, which is obviously much more difficult to stay warm, safe, quiet (which is kind of important in this film), or dry in than a big, sturdy house, with that last point being particularly important if they were right next to to a source of water that would naturally get flooded out in heavy rain, something they would run the risk of even in a big, sturdy house, let alone a flimsy piece of fabric that could get blown away by a stiff breeze, one that's already huddled underneath a forest of trees and heavy branches that, on a long enough timeline,
will eventually fall and squash someone. It's either that, or, as a family comprised of three children, a pregnant woman, and a non-construction working, engineer father (just like my own dad, who, even as a big DIY-er, still had to hire outside, professional help to build his current home), they somehow find a way to transport all the necessary materials, learn the required knowledge in a post-Internet age, and obtain the manpower needed to not only build a solid house there from scratch, but also do so without once making enough noise to be discovered over the sound of the waterfall (which would be an extremely difficult thing to guarantee, because, speaking as someone who's helped build a house firsthand before, it's often a fairly noisy process, much louder than, say, the sound of one person shouting, even if they somehow tried to build and maintain the house directly
beneath the waterfall itself, which would also be a ridiculous idea).
No offense, but having to state any of this at all honestly makes me feel like Lisa when Krusty attempted a comeback through observational comedy, and he says "Have you ever noticed how there are TWO phone books, a white one, and yellow one? I mean, what's the deal with that??":