Hi, Bi! Good question. There could be several reasons, or a combination of them:

Some people fear what they don't understand, and since we ourselves don't always understand why we do it, we can't really expect them to either. Some people would rather deal with things being black and/or white, but they get confused with anything in between. They think they know the way of the world, and then we come along with our spectrum of colors, and blow that theory out of the water.

In some cases, it's also homophobia. MtFs are frequently seen as gay men and FtMs as lesbians, and despite many advances, homophobia is still alive and well in the 21st century.

You mentioned your housemate's problem with it. I don't like to generalize, but it has been my experience that girlier girls have the biggest problem with our preferred mode of dressing. I've never asked any of them why, but I imagine that they think all females should look a certain way, and that we are rejecting their representation of what a female should look like and be like.

I think the best way to smooth over these misunderstandings is to talk about them, but that's easier said than done. We don't like to disclose because people won't understand it, and people don't understand it because they don't really want to know - a real Catch-22. I hope your housemate comes around eventually and won't see your gender expression as a rejection of her or her values.