Demolition is not going to increase social interaction. Also, there's plenty of apartment space for active players right now. You may not get your choice of housing district for your apartment if you're on Balmung but you can still get one.

Many still can't seem to grasp why the housing system tends to generate very little spontaneous social interaction. The bulk of the game's content does not take place inside the housing wards; therefore few players spend the bulk of their time in the housing wards and when they are there, they're generally in the instanced portion of housing, not standing outside in the ward where they will be seen by others.

If you want to generate more social interaction in the wards, then you need to create a reason for more players to be passing through the same ward instead of being divided between 240 different wards/subdivisions per world.

If you feel like your specific apartment building isn't active enough, then find one that is more to your liking and move to that building.