One reason is because of wards, Only 60 plots each split into two subs, so at most, you'd see 30 players out and about.
Plot instancing could improve this.
With instancing, you'd have only one ward, with an unlimited number of owners of each plot. When you arrive, your own house would be visible on your plot, and a random selection on the others. unless you pick a specific ones to display via the placards.
This way, you can tailor the appearance of your neighbor plots by selecting whose houses show there, and visit any house on any plot simply by picking one from a list on the placard.
Less desirable plots would get reduced in price over time to encourage more buyers in those areas.
So, instead of just 30 residents per subdivision, you could have thousands in each housing development.
Upon entering a plot though the front gate, you'd enter it's instance. No one would see you there from the street unless grouped with you.
Also, there would be a load delay when entering the plot instance, but not when you enter the house itself, because it would be part of the instance. Ideally, you'd still see everyone out on the street while on your plot.