I agree that it's something that affects a good chunk of the playerbase. But it has to be admitted that that chunk is disproportionately distributed to a small chunk of servers.

So devs are left with trying to strike a balance. Do they spend time and resources on features that only a few servers will ever need? Or do they take a more moderate approach that satisfies the needs of most of the servers?

Personally, I feel suggestions such as instanced housing are only "fixes" for the overpopulated servers, without providing any benefit to the rest, or even risking being largely unwanted. If we want to come up with ideas for the "housing crisis," it should probably be something that's good for every server, or at least not just the few (I presume few, does anybody actually know how many this affects?) that are most vocal. In that regard, I just can't really see a good reason to spend more on housing resources.

Again, this is all still only tangential to the auto-demolish. Maybe devs hoped housing would help balance servers, and thought, in an ideal world, they wouldn't need an auto-demolish. But, given the situation, it doesn't seem like such a bad thing to have. Unless, of course, you're a player that wants to take a break. Then it's a punishment. But to anyone constantly checking for free plots, it's at least a glimmer of hope.