I'm another one who thinks instanced housing per character should exist. If they want to keep it a similar money sink to the currently existing housing, pay to unlock it, then pay to upgrade the plot size and the housing footprint each time, but make it upgradeable to the max tier with enough money. Let us put the same stuff we'd be able to access in the current neighborhoods in our instanced property: marketboard, an assortment of default vendors (on top of the ones we can place), indoor and outdoor space to decorate. Let people invite friends to their space if they want, or open it to visitors.

I feel like this system should exist alongside the current neighborhood system, so that the people who still want to live in a public space with their friends could have the ability to do so. If I could have a private house that I could upgrade over time, I'd have no need to maintain my medium in Shirogane - I don't have in-game friends at the moment, so there's no need for me to socialize. But I do like having a house as a place to call my own in game, so until they give me a way to have housing outside of the current system, this is what I have to do.

An additional benefit to this would be that each character could have a house, even if a person has alts. I understand why the current system has the necessary limitations in place, given the limited supply, but there would be no need for that if everyone had their own, private, instanced house per character. I have an alt I like to sometimes play on the same server as my main, and I would LOVE for her to be able to have a house or share my main's, but there's no way for me to do that right now without having to involve another person to do so.

Another option would be to have dynamically spawning housing instances - they did this in LotRO probably a decade and a half ago. Whenever there were no available plots left of any particular plot in a housing neighborhood, the server would dynamically generate a new housing neighborhood instance for people to start filling. I realize this would need probably much more storage/server architecture than they currently have available, but again, if LotRO could find a way to make this work all those years ago, I feel like a company the size of SquareEnix with a game pulling the revenue of FFXIV could figure out something comparable now, surely... if they actually wanted to do so.