Yes it has to be instanced, but I would like them to make it like the garrison where you have it occupying a set space in the world, but when you enter it it’s your own instance. It works quite seamlessly with the garrison. You go in and out without any loading.
If they start planning housing for the new expansions, then all the assets that are usually interactable, like benches, could be added as house furniture with very little effort. They could even transform assets used for world building, like new buildings and their decor, into housing items too, although I’m not sure how much more work that would add.
I guess adding housing to new zones made from scratch to support it would be much easier than changing the layout of old areas. I just want to make sure that they don’t forget housing after one expansion, and of course, I want to be able to have a house that reflects the race of my toons.
The garrison’s terrain was quite impressive. The mine, the lake, the area you got to have just for yourself was quite amazing, specially after you added the shipyard. Just half of it would already have enough space for a mansion and gardens 
But that and the technology they used to get us inside with no loading are pretty much the only things the garrison did right. Having places to show off your mounts and pets, fantastic, having quests for mounts and pets, not so fantastic.
Really, I can’t stress this enough, housing should be no more useful than transmog. That’s it. No farming to get resources, no visitors with special quests (put those on the main city), nothing that makes this anything more than a fun side activity.
Why though, you already have the garrison. You already have a dedicated hs you can use to get there. Why turn housing into a garrison copy? Just use the garrison. It would be a waste a dev resources to replicate what already exists.
I hope for something completely different. A place that is thoroughly customizable but without utility. A dedicated hs so you can access it conveniently and perhaps a NPC for basic vendoring and repairing, since you have those vendors on mounts too, so, same difference I guess.