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To a degree.... yes.
With a bit of a rework of the system, expansion of apartments, separate garden feature, etc. They could increase the prices of houses, so that they were the premium option (while larger apartments would be the middle ground) and then their supply would more closely match their demand.
I thinking housing should be made available to all, but that the wards should stay. More wards and better apartments is my solution.
My masochistic tendencies are moderate, but even I can only get so much satisfaction from failing to snatch the house of my dreams. Again and again.
I usually see at least a couple people around my house in game. Though I think the cause of it is that one of the mansions was bought by an FC and a number of the surrounding housing plots purchased by members of that FC coupled with the fact my home is right next to a market board.
Whether it should or not is irrelevant. They're not likely to change the way housing is, ever. They'll just keep adding more.
I don't really care either way. I got a medium house in one of the ward expansions a while back and I'm happy enough with it. It's in a fairly secluded location so I would hardly notice if all housing was made instanced.