I've said this a million times, but I'll just share my opinion again.

The fact that every house in FFXIV has a physical address is actually really cool. It means that literally anybody (on your data center at least) can physically locate your house without messing with things like friend requests or anything like that. This is great for estates... places that are meant to be gathering places. For example, my small house in the Goblet is a concert hall that I use for bard events.

The problem is that the vast majority of homeowners are what I might call "solo decorators". They use their estate to decorate a pretty little space to AFK in that they, alone, will use. Occasionally a friend may pop in, but for the most part the house is only visited rarely. They are not really utilizing the fact that their house has a physical address that anybody can visit, and in fact would probably even prefer a private instanced area rather than a public one.

Do I think these people should get what they want? ABSOLUTELY. Hell, that's basically what my apartment is, just a fancy, pretty little spot I afk in while waiting for queues or while I'm working on bard music. However I wouldn't want instanced housing at the expense of public residential areas, I would want it as a way to massively decrease the demand of the public housing so that everybody gets what they want. The people like me who want a public estate people can visit get their estates, and the people who want a pretty little spot to decorate get their island home.