Silent Hill exists on three levels which I'll call normal, purgatory and hell. Rose and Sharon die the in car crash, and the policewoman dies in a motorcycle crash, which puts them in the purgatory level. The husband remains in the normal level. There are scenes in the middle where they are in the same room but can't see each other (but he senses her and says he can smell her scent).
The ending is a continuation of that. They remain dead, and go back to share the husband's home, but he can't see them. In effect they are ghosts, haunting him.
There are elements of the timeline I still don't understand, though. The fires started 20 years ago, and presumably that's when Alissa was burned, but Sharon is much younger. Sharon is the good part of Alissa, so wouldn't it have been formed at the time the demon came?
PS I don't think anyone rapes their mother. How could they? "Mother is god in the eyes of the child".