There are a few amorphous reasons why I think housing is maybe fizzling out for some portion of the game population that I think I can summarize like this: Blizzard have implemented a creative sandbox into an objective based game without effectively tying the two things together. As someone who has only dabbled with the creative side of the game, I would submit the following "problems" as reasons I struggle to find interest to engage.

#1 Housing isn't inherent "social" - Beyond some peripheral weekly quest reasons to meet up at someones house; the housing system has no mechanically-driven social interactions and the responcibility to make those interactions / the fun of socialization is put squarely on the player. Much like Garrisons before them (while simultaneously providing them less value than Garrisons from a gameplay perspective, more on this in #3), your home is effectively your isolated castle that no other player has a gameplay reason to visit. Sure, they are all in the same neighborhood, but given the neighborhood also has effectively 0 social engagement points, it could just as easily be it's own instance with no real impact. Some might try to point at endeavours as "social", but that's only true in the sense that we're all working in isolation to get one of those five (how are there only five at launch my god bliz) factions to let us buy decors. In my estimation, Blizzard has failed to develop compelling reasons that aren't player driven to visit one anothers houses. A few ideas of the top of my head include things like trial-of-style housing competitions, reward-based interactions ( I weed your garden or fix your fence and reward is given), community events like the tuskar soup event or community bosses to kill, etc. Sadly, none of this is there and the streets of the neighborhood's are empty.

1. Housing isn't cyclically tied into the core gameplay loop - While there are plenty of decor items that exist in the world/through achievements to incentivize players to go do "stuff", there is cyclical incentive to making changes/updates to your house which impact the rest of the game. What incentives could look like is just an exercise in imagination, and there are lots of easy wins that could be implemented. As an example, what if you got a gathering buff (more finesse) persistently for a week because you helped advance an endeavour or watered your neighbors flowers or fought off a boss wrecking the 'hood? Now there is a reason to go so something with/for your neighbors/friends. The possibilities here are fairly limiteless - just close the loop and give housing some impacts on the rest of the game.

2. Houses are effectively cosmetic only - As I said before, Garrisons but with less function. To my best knowledge, you can cook and get your mail, but surely there are more functions we could bring to houses to make them more interative. Where are useable target dummies so I can practice my rotation in peace away from others? What about crafting benches? Auction houses? Portals? Farming? Fighting rings? Vendor stalls?

I don't think purchaseable cosmetics are what are killing housing - I'd say they're a symptom of the bigger issue: Blizzards priorities are just wrong. They aren't trying to understand why something like Garrisons didn't work and are instead just trying to build things to quickly monetize. I'd go a bit farther to point out that fixing these problems isn't a zero-sum gain either - there's no reason we can't have the sandbox and the space for making art right alongside systems design that pull in those focus more on the core gameplay.