Why is this not the solution?

[Jojoya]

People will outbid everyone else just to resell the houses and make a profit, like the way houses were before the timer was added in but with extra steps

Might to want to clarify that they wouldn't be reselling the house for gil after purchase in an auction system. They would be selling it for real money. If you've outbid the gil other interested buyers have, there's no one left to sell to that would result in a gil profit.

Curious to what the percentage is of people thinking they have a solution to the housing system, only for it to be as terribly flawed as what we currently have and are getting.

The solution exists and others game use it - a fully instanced system that allows every character (not just every player) to have at least one and frequently multiple houses. No player who wants housing gets left out.

Why SE won't use something proven to work in other games and make their players happy is something only SE can answer. We know they like the idea of neighborhoods but in practice they don't work out. They didn't stop to think what makes real world neighborhoods feel active and populated then incorporate those things into the wards to keep them busy.

Wards don't feel like neighborhoods. They feel like abandoned towns. I'd be happier living in an isolated part of the countryside than living in a suburb where no one else goes.