Why is there still no good solution to the housing shortage?

[Seraphor]

This is another good point! Instanced houses can still have external fixtures. Having less houses to load is one steap towards increasing the space limit for furnishing outside.

Instanced houses with external features... isn't that what we have now?

When people say 'instanced houses', what they generally mean is one universal teleport that sends you to your personal/specific players own little instance. This instance would presumably be a small external zone to show off the garden, which leads to an internal housing system like what we have.

You lose the wards, but you double up on all of the individual instances, because instead of just having indoors, you now have indoors and outdoors.
So how would this actually solve anything? just as many instances (if not more), just as much server strain (if not more).

Well these 'instances' would be Duties, just like Eureka/Bozja, so that they are temporary instances which are only loaded by the servers when they're needed, when accessed.
This means:
- Duty queues to access your house, and if we get a repeat of Raubahn EX, you'll have to queue up to enter your own house.
- No queuing for Duties when in your house/garden, because you're already in one.
- Time limit on how long you can stay in your house, just like Eureka/Bozja, because you can't have everyone hogging up all the duty allocations by camping inside their houses 24/7.

This is what you're asking for when you ask for instanced housing in FFXIV. Just so you know.