Instanced housing is the answer. Also, being able to use the same house on multiple characters on one server.
The best one I've seen is SWTOR and ESO. You can have multiple houses on your "legacy" for all your characters on the same server to share. If you only need one house for storage and some privacy, get one and be happy. If you need a different house for every character for RP reasons, go for it and be happy again.
Having neighbors can be a nice experience, but in no way it beats having actually working system with little to no flaws.