The main argument I've seen against housing instances would be the loss of community. Instead of living, breathing communities of neighbors we'd have glorified apartments with none of camaraderie that comes with the current district system. My response was that I'm already getting no camaraderie, so I'd rather have a solo instance house than risk not getting a spot if they release too few districts once more.
But what if we could have utilize both systems? What if we had a bidding system, where people would pay full price to purchase the size house they want in advance and then SE would know how many houses are actually needed per server. If they were interested in limiting houses per character/account, this queue system would also give them a way to check requests against accounts to keep one person from artificially inflating the numbers. Once SE have the numbers they can sort them into just as many districts as are required for that server.
What about the buyers that want to move into neighborhoods together? Well, what if we had a pass code system in place for people that want to be neighbors can place that code with their purchase/bid and get auto sorted together? Too many using the same code would mean some would be left out, but that could also flag potential hoarders as above. People that give no code or small groups would be sorted into whatever open spots remained outside neighborhood requests.
The only limit I would put would be not being able to choose a specific lot. You choose size and hope for the best. That would require an element of rng, but at least you'd get into a spot and SE wouldnt have the headache of 200 requests for lot 30/60 and 20 for the less than prime spaces. Make anyone who wants the largest pay full price upfront with the knowledge that if rng was not on their side, the cost difference would be refunded afterwards.
Once the bidding/purchasing was complete, SE could drop the districts down in an update and people could find their new homes by looking for their character/fc name, or receive a mogmail with their address.
No racing for spots, no cursing server lag or reset connections. No element of luck in getting a house, only location.
Does this seem like a feasible solution? This was a sore spot for a lot of people with 4.1 and i don't want to see a repeat of this mess at 4.2, nor do i want us to lose the sense of community the current district system provides.

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