Smaller servers can and do have this problem. It's how I lost my first house when I had to take an unexpected break prior to Stormblood's release. Where there had been a couple of dozen houses available when I stopped playing, there was nothing when I got back. Even when Shirogane was later added, I still couldn't get another house even though I was looking at Goblet since that's where my first house had been and where I knew my chances were best.
The only reason it's not a problem right now is because of the 4.2 ward addition. That was an additional 2880 houses on each world. Considering Coeurl is down to about 600 available houses right now (that could be off, I haven't in a few weeks), that's still over 2200 players and FCs that wouldn't haven't housing if the new wards hadn't been added.
Now imagine what will happen when the new expansion is released and there's a swarm of returning players not to mention new players. What's currently available will disappear all over again and once more there will be players looking for housing that can't get it.
Auto-demo is needed as long as housing is a limited resource. No limited resource should ever be controlled by people who have quit playing when it could be going to those who are actively playing.
You know when you buy that a house is something you're only allowed if you maintain an active sub. Don't buy it if you're not certain you're going to maintain your sub. Get an apartment instead. You can't lose an apartment if you stop playing for a while.
No game is ever able to meet all the demands of all their players. You're living in a dreamworld if you think game developers can do it. For all that can be accomplished with technology, there are still limitations and still resources to be considered. By all means make suggestions for things you think will improve the game experience but in the long run you need to accept the game as what the dev team provides. If you feel the game isn't living up to your expectations when it could, find a different game to play.