Churches and other non-profits are usually exempt from property taxes, but there's no good reason for treating them differently.
Example: In the Silicon Valley suburb where I live, land is worth about $2 million per acre. There is a 20-acre monastery here (adjacent to the mansion recently sold by Barry Bonds, and down the street from Cisco's CEO) where 16 cloistered elderly nuns sleep on straw mattresses, have no TV, and wake up in the middle of the night to pray. Their only "work" is "prayer", and they live only on "alms". I kid you not: http://www.poor-clares.org/losaltos/losaltosl.html.
Example: About a mile north of here are hundreds of acres of land owned by Stanford University in the hills above campus, with sweeping views of the San Francisco Bay. Nearly all of the land is off-limits to everyone but -- wait for it -- cows. The university grazes a handful of cows there, in order to comply with Leland Stanford's requirement that a demonstration farm be maintained on a portion of the vast amount of land he used to create the university.
So we have nuns and cows, both sleeping on straw, keeping hundreds of acres of prime Silicon Valley land off the market, thus propping up property values for me and my zillionaire CEO neighbors, and making sure that their gardeners and maids can't afford to live anywhere near them.
For the market to be able to guide all land to its best use, all land has to be treated equally -- even land owned by churches and governments. If people really value churches, they'll either pay for them to occupy prime sites, or they'll drive a little further when they want to go pray as a group.