Forcefully taking private property from individuals to later sell to other private parties for private use sounds like the nightmare version of eminent domain.

Because it's not really practical to build more land, and it's difficult for people to choose their neighbours whose land use is going to affect their own; things like utilities, transit and emergency services have to be organized geographically. If guitar prices are high, anyone can make more guitars, and if you don't agree with your band on what kind of music to play, it's easy to form a new band with a different group of people. Land and housing don't behave like that.