Steam installs games to the home folder. I sort of get why this decision was made, although I would prefer they installed the games to /opt and maybe only the personal files to /home. The current situation means that having an encrypted home folder is not really an option.
If my laptop gets stolen, I want my documents and passwords to be safe. I don't care if my saved games are stolen, let alone that people might know what games I play. Is there a way to unencrypt a part of the home folder? Or should I leave the entire home folder unencrypted by default and only encrypt subfolders? I am not an expert on this to be honest, I just always use the option to encrypt the home folder provided during install.
There is no easy way to do this. As it is now, ecryptfs encrypts all of $HOME as you can see. So you would need to install without encrypting home and then use ecryptfs to encrypt parts of home and then configure it to automatically decrypt when you log in.
See https://help.ubuntu.com/community/EncryptedPrivateDirectory for how to do this. Note the page is outdated and I can not vouch for accuracy thus I am not copying the contents here.
The other option would be to use a separate user for your steam games.
Up to you which option is best.