By now, we all know that data center development in the United States has reached an astonishing scale. Communities from Northern Virginia to suburban Texas are organizing against new projects, zoning battles are heating up, and data center hyperscalers are outbidding home builders for vacant land at prices that would have seemed exorbitant just a few years ago.
Nearly half of Americans currently oppose building an AI data center in their neighborhood, with apartments listed as the type of development people least want next door, according to a survey commissioned by Redfin.
But one data point provides a clearer picture of the scale of the change than these local battles and surveys.
Spending on computers and peripherals has exploded from about $150 billion to nearly $400 billion in less than two years, driven in no small part by the boom in artificial intelligence development, according to Federal Reserve Board data on private capital investment.
Meanwhile, investment in single-family homes remained roughly flat at about $400 billion over the same period. Two lines that have run parallel for 60 years, far ahead of housing construction, are now almost touching each other.
To understand how surprising that is, consider longer history.
From the 1960s to the 2000s, single-family home construction accounted for the bulk of private investment, but computing infrastructure barely registered. The housing bubble of the mid-2000s led to nearly $500 billion in investment in home construction, which disappeared during the financial crisis. Although the gap briefly narrowed after the 2008-2009 housing crash, the structural gap between the two categories remained large throughout.
That gap is no longer there. For the first time in modern American economic history, building computing infrastructure is attracting nearly as much private capital as building homes. This is the background behind every zoning battle, every rezoned parcel, and every electrician who quit his job as a home builder for a data center job.
“I don’t think housing developers can compete.”
Across the country, data center developers and home builders are increasingly competing for the same vacant land, with home builders often losing out.
The competition is most pronounced in Northern Virginia, long the center of the data center industry and where land prices have reached levels that make residential development even more difficult.
In November 2025, SDC Capital paid $615 million (approximately $6.3 million per acre) for 97 acres in Leesburg. The land was primarily acquired by JK Land Holdings in 2021 for approximately $57 million. CBRE’s 2H 2025 North American Data Center Trends Report shows that data center land costs in Northern Virginia and the Northeast exceed $8 million per acre.
“I don’t think housing developers can compete,” said Arif Gasilov, a partner at the sustainability and ESG consultancy Gasilov Group, who studies the relationship between data center infrastructure and the housing market.
Pressure on existing neighborhoods is also visible. Data Center Dynamics reports that the developer is approaching homeowners in Ashburn, Virginia’s Regency neighborhood with an offer that values the land at about $4.4 million per acre, for a total purchase price of about $576 million for the 143-unit residential area. This Loudoun County city is located in the heart of Virginia’s “Data Center Alley.”
The current HOA president says no formal proposal has been made, and the original proposal, which required unanimous consent from all 143 homeowners, has reportedly stalled.
But this episode shows how thoroughly the region’s land economy has been rewritten by hyperscalers like Amazon, Microsoft, and Google. These companies require large tracts of land with access to power and fiber optics, and can outspend housing developers to acquire them.
“As servers move, the market changes,” said Rafay Baloch, CEO and founder of cybersecurity firm REDSECLABS, who has observed dynamic developments across multiple markets. “There’s real pressure. We need to do better with zoning and brownfield redevelopment and make sure our data centers are secure from the beginning.”
If you can’t beat them, join them.
Perhaps the most telling sign of how economic conditions have changed comes from Natelli Communities, a Mid-Atlantic-based residential and commercial development company. Natelli Communities is a family-owned private development company that has been building master-planned communities for over 40 years. They’ve been quietly pivoting into data centers using the same basic planning strategy.
In 2021, CEO Tom Natelli invested in and joined the board of directors of Quantum Loophole, which helped develop a gigawatt data center park in Frederick County, Maryland. Late last year, the family’s Nateri Holdings unit proposed a campus called New Hill Digital Campus (four buildings designed for up to 300 megawatts of capacity) near Apex, North Carolina, but withdrew the application in March after fierce local opposition.
At the same time, Nateri Holdings proposed building a data center campus in Calvert County, Maryland, and was willing to accept a $30 million regional park contract to appease opposition, but ran into a wall of community resistance and was threatened with suspension.
“It is very interesting that housing developers choose data centers over housing because the economics are better,” Gasilov said.
Other homebuilders are jumping on board with the data center boom rather than fighting it.
PulteGroup, the third-largest homebuilder in the United States, recently announced an early-stage partnership with Nvidia and startup Span to install small “fractional data centers” called XFRA units equipped with Nvidia’s water-cooled RTX PRO 6000 Blackwell Server Edition GPUs on the exterior of new homes.
The pitch is that new construction is underutilizing the power capacity to run distributed AI computing. Instead of directly offsetting energy costs, homeowners receive discounts on their electricity and internet bills.
Span claims it can deploy 8,000 units six times faster and at one-fifth the cost of a comparable centralized 100-megawatt data center. The rollout is in its early stages, with Pulte Group confirming that at least one unit has been installed in each of a small number of communities so far.
Natelli is the clearest example of a residential developer seeking to bring master-planned community expertise directly into data center development. The challenge is that data centers face acceptance from a fundamentally different community than residential homes.
PulteGroup’s XFRA experiment is a reverse approach that decentralizes computing to homes rather than centralizing it, and could be a smarter political path, even on a smaller scale today.
ripple effect
The impact on housing extends far beyond the parcels rezoned for data center development. Gasilov identifies three different channels through which data center growth increases the price of nearby homes, even when homes are built.
Utility bills are the most direct. In Virginia, the state Corporation Commission approved an $11.24 per month increase in Dominion Energy’s base rate for the average residential customer in January 2026, part of a broader power grid upgrade widely seen as being driven by data center demand.
A Virginia bill (SB 253, sponsored by Sen. Louise Lucas) that would shift more of these infrastructure costs to data centers passed the Legislature, survived a series of amendments by the governor in April, and was signed into law in amended form. SCC estimated that the original cost-shift provisions would reduce housing costs by approximately $5.52 per month.
“It shows how much subsidy residential customers are currently making,” Gasilov told Inman.
Construction work is another type of pressure.
The Texas Tribune reported in April that data centers in Abilene, Texas, are luring electricians away from home builders, with electrical subcontractors accounting for 45 to 70 percent of data center construction budgets, according to the International Brotherhood of Electrical Workers, the union that represents electricians.
Abilene builder Gene Lantrip said the homes are taking two months longer to complete than before the data center arrived. “My subcontractors are understaffed. My electricians lost two supervisors and several assistants at the data center,” Lantrip told the Tribune.
Just outside Abilene, a 4 million square foot AI data center called Stargate (backed by OpenAI, Crusoe, and Oracle) is reshaping the local economy even before it opens. Lantrip says the project outperforms home builders in terms of skilled labor, with electricians on the Stargate site earning twice as much as residential subcontractors.
Additionally, there are what Gasilov calls second-order effects on housing supply. “When parcels that were zoned or planned for residential are rezoned to industrial for data centers, that means the housing supply that was in the pipeline is now gone,” he said. “Demand for housing will be concentrated in lower areas, driving up prices across submarkets.”
dispute remains unresolved
Baloch argues that the solution lies in planning, not opposition.
“It’s not about the land, it’s about how you plan everything,” he said. “Developers and planners need to bring data center infrastructure to the table in the planning process, not as an afterthought after all the housing has been included. By considering energy, zoning, and cybersecurity together, you can actually minimize conflicts and get the most out of both your digital and built environments.”
But for now, disputes remain unresolved in markets from northern Virginia to suburban Texas.
“Even if a home builder acquires a plot, the prices of the homes there will be higher due to higher utility costs due to the construction of the electric grid, higher water bills, higher construction labor costs, and tighter supply pipelines due to rezoned plots,” Gasilov said.
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