This is just a proof of concept to show how the Halfhill Farm could be expanded to player housing without "depopulating" the cities. I think the fact that Halfhill is often crowded is proof enough, but let's just give some examples anyway.
Upon reaching level 10 a player receives a quest to inherit a plot of land in Elwynn/Durotar. You begin with nothing but a shed of tools and a weed ridden spot of land with four plots of soil. Every 10 levels you will receive a quest to unlock two more, ending with 20 plots of soil. The quests gradually increase with difficulty. The first few just sending you to go run an errand in Mulgore or Westfall, but eventually you'll be gathering seed samples across Northrend or killing off mobs in the Overgrowth in the Barrens.
From 10-30 You will get to choose from the following from a nearby farmer NPC:
Unknown Seed - Common Old World Herbs (1 to 150 herbs)
Medivh-weed Seed - Common Old World Enchanting (1 to 150 enchanting mats)
Dragonsnap Seed - Common Old World Leather (1 to 150 leathers)
Dwarven Potato Sprout - Common Old World Ore (1 to 150 ores)
Cottonvine Seed - Common Old World Cloth (1 to 150 cloths)
Tirisfal Pumpkin - Trinket/Decorative Plant
When you reach level 30, you will unlock a quest to get a house. It will be automatically built to match your racial faction's style. If you are exalted with another faction, you will have the option of changing your house to that style for a very large sum of gold. Other players in your party, if you are party-leader, will be able to visit your farm.
From 30-60 you will unlock the following from the farmer NPC:
Mysterious Seed - Rare Old World Herbs (150 to 350 herbs)
Highborn Daisy Seed - Rare Old World Enchanting (150 to 350 herbs)
Carnivorous Overgrowth Seed - Rare Old World Leather (150 to 350 herbs)
Silithidwhip Seed - Rare Old World Ore (150 to 350 herbs)
Durotar Cactus Seed - Rare Old World Cloth (150 to 350 herbs)
Darkspear Melon - Trinket/Decorative Plant
(Note: All "Old World" seeds, drop 5-10 mats each time, from Outland onward, they become more sparse, closer to Pandaren-level material drops)
Once you hit 60 you'll unlock a person in each of your faction's cities allowing you to unlock a few decorations once you reach "best friend" status with them. Each decoration having something to do with their race. You will also be able to invite them onto your farm. You will also unlock the option to buy a journal where you can set your hearth to your home (it would probably be around the range of 1,000 gold).
Some examples could be a set of very large kegs from a dwarf, some very nice totems from a tauren, etc.
From 60-70 you will unlock the following from the farmer NPC:
Warpshifting Seed - Outland Herbs
Nethervine Seed - Outland Enchanting
Felwhip Seed - Outland Leather
Terocone Sapling- Outland Ore
Eco-Dome Mutant Seed- Outland Cloth
Draebulb Seed - Outland Elemental Motes
Zangarmarsh Shroomling - Trinket/Decorative Plant
At 70 you will unlock a Achievement Decorations. A new category of achievements will reward trophies that can be mounted inside the house, or on the farm. Completing all the achievements in each category rewards the trophy. You might get the head of a Gnoll to mount once you've completed all of Redridge, Westfall, and killed Hogger, while hordeside they might get a Quilboar's head for doing an equivalent series of achievements.
You will also be able to become friends with an Ethereal or an Arakkoa, but only one. Raising rep with one lowers the rep of the other. If you become best friends with the Ethereal you can invite him to live on the far corner of your farm where we will set up a little camp, and will offer void storage. The Arakkoa will set up a camp in the same spot the Ethereal would, and will offer you a daily quest that rewards a satchel with a few random level-equivalent potions.
From 70-80 you will unlock the following from the farmer NPC:
Ice-Encrusted Seed - Northrend Herbs
Malygos' Tear Seed - Northrend Enchanting
Drak'snare Seed - Northrend Leather
Crystalbloom Seed - Northrend Ore
Dalaranian Flax Seed - Northrend Cloth
Saronvine Seed - Northrend Crystallized Elements (Random)
Crystalsong Sapling - Trinket/Decorative Plant
At 80 you will unlock a new NPC to raise to best friend. A Tuskarr who will give you a very long quest chain that will end with him installing a pond on your farm that drops random trash that sell for a few gold, and a very rare chance of dropping a battle pet.
From 80 to 85 you will unlock the following from the farmer NPC:
Overgrowth Seed - Cataclysm Herbs
Neptubloom Seed- Cataclysm Enchanting
Ramkahen Cactus - Cataclysm Leather
Crystal of Twilight - Cataclysm Ore
Enhanced Whiptail Seed - Cataclysm Cloth
Raging Elemental Crystal - Cataclysm Volatile Elements (Random)
Clipping of Teldrassil - Trinket/Decorative Plant
Upon reaching 85, you will unlock an extra daily from another farmer nearby that rewards either cooking or fishing skill. Other than that, you will just unlock the following seeds:
(including the fruit and vegetables):
Enigma Seed - Pandaren Herbs
Magebulb Seed - Pandaren Enchanting
Raptorleaf Seed - Pandaren Leather
Snakeroot Seed - Pandaren Ore
Windshear Seed - Pandaren Cloth
Songbell Seed - Pandaren Motes of Harmony
Autumn, Spring, and Winter Blossom Saplings - Trinket/Decorative Plant
Upon reaching 90, you'll be able to reach Best Friend status with the Tillers, and when you receive the gift on your Pandarian farm, you will also receive it on your farm near your faction city. You will also get the upgrades you buy to put on your pandaren farm, at your personal farm.
Moving on to other expansions and beyond, more buildings could be unlocked, perhaps orchards or the ability to raise livestock for cooking materials. Maybe more NPCs that unlock more decorations.
The point would be to provide a few materials, while also serving as decorations and a private place for players to go where they can expect privacy. Without depopulating the cities. It would never provide essentials like bank access, auctionhouses, reforging, etc. It would be a personal inn and a place to escape to privacy.