So technical wise we could handle a server with all housing locations taken.
The original intent was to allow players to be able to be "real estate brokers". This is also why house prices are much higher, to begin with, here.
Luna houses will always be the premier spots now however the biggest reason why most sell for $$ or Sovereigns is because GOLD is actually worth something here. Gold is worth more than $$ or Sovereigns.
Even your most established UO Heritage player has around 10 - 15 million. That is not a lot of gold.
Your AVG UO Heritage player has between 500k and 5 mil at any time.
Another big reason why we did not limit housing from the start is because players will always try to cheat the 4 account limit. VPN, non-static IPs, a 6 year old could figure it out. If we limited houses to 1 per account, more people would try to bypass this limit.
By making houses unlimited, there is no need to try to sneak that 5th or 6th account by. (This is also why we made the Shard Loyalty system the way it is)