I’m not Catholic, but this has in general always seemed a poor argument to me.
In the past, high churchmen often led lavish lives. As great aristocrats of the Church they expected to live similar to great secular aristocrats. And they did.
Possibly I’m just ill-informed, but I don’t believe this is as much the case as it used to be a few centuries ago.
The Church owns real estate in cities worth enormous sums. Much of it is in churches and cathedrals, which don’t exactly have a whole lot of alternative uses.
It is, IMO, debatable whether the Church should have spent such immense sums on art and architecture. Is that part of its mission?
Those churches are not owned by the Church. They were built by locals with their own resources. Trust me on this one ... because I have just gone through the process. Our parish purchased a former Methodist/Episcopal church that was closed and shuttered. The church had been sold to a local family on condition that it never be resold for commercial use. We used our own funds to acquire the church and our own funds to restore it. The Church gave us nothing.
Insofar as the artwork, much of it was gifted to the Church. The Church acts a a guardian. Artwork is maintained through other resources, such as Vatican Patrons.
Quite a bit of the artwork was given as gifts by various people/ groups/ countries. I personally would not mind if they sold some of it, but how do you decide which to sell. I might feel a bit insulted if i gave them a Picasso and they sold that but kept the Dali that my sister gave them.
In regard to the architecture Look in the Bible at the description of the Ark, the vestments, and the Temple.
They gave the very best they had when they picked the animals to sacrifice. The other offerings they gave were the first fruits, the very best they had.
Why would we do any different?