what if the houses are like in a special plane of oblivion like xarxes created (obviously maintained by a mage)

Sounds so much of a lore-breaking. Instead I would prefer an instanced housing type.

I thought instanced housing worked well in EQ2. Actually, my real preference would be for some instanced housing (in cities) along with some Vanguard-style non-instanced housing (in dedicated player-housing areas).