On the outskirts of Dallas/Fort Worth, where pastureland once stretched uninterrupted to the horizon, thousands of new structures are rising. Windowless. Warehouse-sized. Fenced in and humming with electricity. These are not fulfillment centers or factories. They are data centers, the physical backbone of artificial intelligence.
Texas, long known for oil rigs and subdivisions, is now ground zero for the AI economy. The boom is attracting billions of dollars in investment and cementing the state’s status as a tech powerhouse. Unfortunately, it is also triggering a crisis hidden in plain sight, measured not in megawatts or server racks but in vanished land deals, rising home prices, and shrinking opportunities for everyday Texans to buy a home.
The land is still vast. The consequences are even greater.
The gold rush no one sees
Texas is now among the top data center markets in the United States. As of 2025, the state hosts more than 400 operating facilities, with dozens more under construction. The Dallas/Fort Worth metroplex leads, followed by Houston, Austin, San Antonio, and a growing constellation of sites across Central and West Texas.
Major players are staking enormous claims. Google has poured hundreds of millions into new data centers in Midlothian. Meta is backing massive projects near Temple. Vantage Data Centers has announced plans for a $25 billion AI campus spanning 1,200 acres in West Texas. These facilities don’t look flashy, but the land beneath them has become some of the state’s most valuable real estate.
Data centers require very specific conditions: large, contiguous parcels, immediate access to power substations, proximity to fiber lines, and predictable permitting environments. When a site meets those criteria, land prices can skyrocket, sometimes quadrupling in just a few years. Land that once sold for agricultural use at $40,000 an acre can suddenly command $300,000 or more if it’s “data center ready.” For landowners, that’s a windfall. For residential developers, it’s a dead end.
When servers beat starter homes
Texas has long prided itself on attainable homeownership. Modest single-family starter homes with yards, garages, and room for kids have formed the foundation of the state’s growth model. That model is now under strain. As data centers compete for the same utility-ready land once targeted for subdivisions, residential developers are being priced out. The result is a shrinking pipeline of affordable lots, especially near major job centers. When land costs rise, builders pass those costs on. Entry-level homes become midrange homes. Midrange homes become luxury products. And first-time buyers are pushed further from the city or out of the market altogether.
In Opportunity Zones, where tax incentives were designed to encourage affordable housing and community investment, data centers are increasingly dominating the landscape. The irony is hard to miss: land intended to support people is now optimized for machines.
Water, Power, and the Texas Paradox. If land is the first pressure point, resources are the second. Data centers are extraordinarily thirsty and energy-hungry. A single facility can consume millions of gallons of water annually for cooling, even as Texas communities face worsening drought. Statewide, existing data centers already use tens of billions of gallons of water each year, a figure expected to climb sharply as AI workloads grow. Energy demand is even more daunting. Some large data centers draw as much electricity as a small city and operate around the clock. By 2030, data centers could account for more than 10 percent of Texas’s total electricity demand.
That power comes from the same grid that keeps homes cool during 105-degree summers. In regions where infrastructure upgrades lag behind development, residents are already seeing higher utility costs and greater strain on the grid. Texas has always lived with resource tensions between growth and scarcity, expansion and restraint. The scale of AI infrastructure is pushing those trade-offs into uncharted territory.
Who bears the burden?
The impacts of data center expansion are not evenly distributed. Facilities are often sited near low-income communities, rural towns, or the edges of Opportunity Zones: areas with cheaper land and fewer regulatory hurdles. Residents in these areas may face increased noise from backup generators, air pollution from diesel systems, and higher utility bills tied to infrastructure upgrades.
At the same time, these communities rarely see the job creation associated with traditional industrial development. Data centers are capital-intensive, not labor-intensive. Once built, they employ relatively few people. In some towns, residents have pushed back, questioning why scarce water supplies and public infrastructure are being devoted to facilities that offer limited local benefit, especially given unresolved housing shortages.
The policy catch-up game
Texas lawmakers are increasingly acknowledging the collision course between data center growth and housing affordability. Discussions are underway to ease restrictions on smaller homes, streamline residential permitting, and improve oversight of large infrastructure users.
Unfortunately, policy moves slowly, while the market moves fast. Affordable housing programs, including the Low Income Housing Tax Credit, struggle to keep pace with escalating land prices. Existing guidelines don’t always prevent affordable developments from being sited near heavy industrial uses, nor do they adequately account for the long-term impacts of nearby data centers. The result is a patchwork approach that risks prioritizing short-term economic headlines over long-term community stability.
The bigger question
None of this is an argument against AI or technology. Texas’s emergence as a data center powerhouse is, in many ways, a success story. Investment is flowing, and infrastructure is expanding. The state is positioning itself at the center of a transformative global industry. But growth without guardrails has consequences. The question Texas now faces is not whether to embrace AI. It already has.
The big question is whether the state can manage all this growth without sacrificing its defining promise: that a middle-class family can still afford a home. When land once meant for neighborhoods is absorbed by server farms, when water meant for people cools machines, and when housing policy trails behind industrial expansion—the imbalance becomes hard to ignore. Or, as Texans might put it: you can ride a good horse hard, but not forever.
What comes next?
A more balanced approach is possible. Thoughtful land-use planning, clearer reporting on water and energy use, stronger protections for residential development, and incentives for mixed-use infrastructure could allow Texas to lead in AI without sacrificing its housing foundation. That will require coordination among state leaders, local governments, developers, and communities, as well as a willingness to ask hard questions before the next land deal vanishes overnight. Texas has always believed in building for the future. The challenge now is ensuring that the future still has room for families, not just machines.
Data centers drink water like a small Texas town. A hyperscale data center can use ~550,000 gallons of water per day, about what 30,000 to 50,000 people use in their daily lives. And they burn electricity like there’s no tomorrow. These places pull 50 to 150 megawatts, sometimes more. A 100 MW data center consumes as much power as 70,000 to 80,000 homes annually.
Bottom line
A giant data warehouse costs more than a billion bucks, drinks like a town, and powers itself like a city. That’s not a server room. That’s an industrial-sized beast. It’s no longer a question of if. It’s happening. And I know a few guys who might just become billionaires selling off thousands of acres to data centers. Land that was originally earmarked for housing.
