Everyone that I know, who is a little into Feng Shui knows that it is taboo to live in a house that is located at a T-junction.

Why is that so? In Feng Shui, qi should flow slowly. If qi is allowed to accelerate, as in a straight line, then the resultant fast flowing qi becomes destructive and anyone standing in its path will suffer. The T-junction is an example of how qi can accelerate and and then brought to a sudden stop by the house located at the intersection. The occupants are the ones that will bear the brunt of the destructive qi.

Logically it make sense too. There have been many cases of cars crashing into such homes either due to mechanical malfunction, drunk driving or simply due to carelessness. Also during the night time the headlights from vehicle at the intersection can disturb the occupants and prevent them from getting a good night's rest. What is less obvious is the noxious fumes emited by the vehicles that rush towards the house. In the long run, it can affect the health of the occupants.

The same applies to a Y-junction which is quite similar to the T-junction and suffers from the same problem.

What if the T-junction is located is a quiet neighborhood? I would think that the destructive effect is much lesser.

I would nevertheless advise against buying such a house especially if you live in a community with a strong Chinese presence. You will very likely find difficulty in securing a buyer or may be forced to accept a lower resale price!

What if you are already staying in such a house and cannot move?

You can block of the strong incoming bad qi using a wall or hedges. You can also relocate the main so that it does not directly face the T-junction.

In the long run, and especially if the traffic is heavy at the intersection, you are still better off moving to a more Feng Shui compliant house.