How does inflating or over inflated real estate prices help the economy at the end of the day?

If more and more of a household income goes to pay for just a piece of land, this robs our whole society of the ability to pay for other valuable and progressive things.

Sinking so much money into a tiny plot of earth and into a continuously deteriorating building seems like it will not end well.

Why hasn't the government placed limits on land values to stem this serious problem?  Why is land value an unbridled free market when this is causing so much financial destruction to society?