Charging tax on property (building + land) mostly just disincentivizes more intensive buildings.

Tax is also incentive. You want to tax things you want to discourage more than things that you want to encourage.

They're physical luxury goods that deteriorate as you use them, like cars. They appreciate largely because of nearby corporate and government investment (in office complices, schools, utilities).

That people make money off of them suggests that the government isn't being nearly aggressive enough about capturing the value it's creating here.

I can travel a mile down the road and due to a "bad" neighborhood, many properties are literally negative value. They sit till they burn because demolition is more costly than the value of the land.

Markets don't price risk well. Housing markets definitely don't price capital investments or liabilities more than 5 years out well.