To get to speak with the inhabitants talk to the musicians first. Talk about their housing situation.
Go and confront the thieves.
But they seem to be little intimidated by... ghosts.
Could you scare them away?
Build a ghost figure to scare them. The bedsheet ? is a good start.
At the alley. Use your telekinetic powers to get it.
Fix the bedsheet.
It would need something more. Like, eyes.
Cut eyes into the fixed bedsheet. ?
Use scissors.
What are the thieves talking about? Glowy eyes?
Make the eyes glow with light.
Visit the store.
You have the fixed lantern? Put it into the ghost figure to make it glow. Use the fake ghost on the house to scare them away.
Make it move. Use your telekinetic powers on it to make it float. The thieves will run.