On the outskirts of Dallas/Fort Worth, where meadows once stretched uninterrupted to the horizon, thousands of new structures are rising. Without windows. Magazine size. Gated and buzzing with electricity. These are not fulfillment centers or factories. They are data centers, the physical backbone of artificial intelligence.
Texas, long known for its 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 technological powerhouse. Unfortunately, it also creates a crisis hidden in plain sight, measured not in megawatts or server racks, but in vanished land deals, rising home prices, and declining opportunities for everyday Texans to buy a home.
The country is still vast. The consequences are even greater.
The gold rush that no one sees
Texas is now among the top data center markets in the United States. As of 2025, the state is home to 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 locations in Central and West Texas.
Major players make huge claims. Google has poured hundreds of millions into new data centers in Midlothian. Meta supports huge projects near Temple. Vantage Data Centers has announced plans for a $25 billion AI campus spread across 1,200 acres in West Texas. These facilities may not 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 of land, immediate access to electrical substations, proximity to fiber optic lines and predictable licensing environments. When a location meets these criteria, land prices can skyrocket, sometimes quadrupling in just a few years. Land that once sold for $40,000 per acre for agricultural use can suddenly fetch $300,000 or more when it’s “data center ready.” This is a windfall for landowners. It is a dead end for housing developers.
When servers beat starter homes
Texas has long prided itself on attainable homeownership. Modest single-family starter homes with yards, garages and space for children are the foundation of the state’s growth model. That model is now under pressure. As data centers compete for the same utilitarian land once earmarked for subdivisions, residential developers are being priced out. The result is a shrinking pipeline of affordable lots, especially near major employment centers. If land costs rise, builders pass on those costs. Entry-level homes become middle-class homes. Mid-range homes are becoming luxury products. And starters are pushed further out of the city or out of the market altogether.
In Opportunity Zones, where tax breaks are designed to encourage affordable housing and community investment, data centers are increasingly dominating the landscape. The irony is hard to miss: land meant to support humans is now optimized for machines.
Water, power and the Texas paradox. If land is the first bottleneck, resources are the second. Data centers are extremely thirsty and hungry for energy. A single facility can use millions of gallons of water annually for cooling, even as Texas communities face increasing drought conditions. Statewide, existing data centers already use tens of billions of gallons of water every year, a figure that is expected to rise sharply as AI workloads increase. The demand for energy is even trickier. Some large data centers use as much electricity as a small city and operate 24 hours a day. By 2030, data centers could be responsible for more than 10 percent of total electricity demand in Texas.
That power comes from the same electrical grid that keeps homes cool during 105-degree summers. In regions where infrastructure upgrades are lagging behind development, residents are already seeing higher energy costs and greater pressure on the electricity grid. Texas has always lived with resource tensions between growth and scarcity, expansion and restraint. The size of the AI infrastructure pushes these considerations into uncharted territory.
Who carries the burden?
The consequences of data center expansion are not evenly distributed. Facilities are often located near low-income communities, rural towns, or on the edges of opportunity zones—areas with cheaper land and fewer regulatory hurdles. Residents in these areas may experience increased noise from backup generators, air pollution from diesel systems, and higher energy bills due to infrastructure improvements.
At the same time, these communities rarely see the job creation that comes with traditional industrial development. Data centers are capital intensive, not labor intensive. Once built, they employ relatively few people. In some cities, residents have pushed back, questioning why scarce water supplies and public infrastructure are being spent on facilities that provide limited local benefit, especially given unsolved housing shortages.
The policy catch-up game
Texas lawmakers are increasingly recognizing 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 major infrastructure users.
Unfortunately, policy moves slowly while the market moves fast. Affordable housing programs, including the low income tax credit, are struggling to keep pace with escalating land prices. Existing guidelines do not always prevent affordable developments from being located near heavy industrial applications, nor do they adequately consider the long-term impacts of nearby data centers. The result is a patchwork approach that risks prioritizing short-term economic news over long-term community stability.
The bigger question
None of this is an argument against AI or technology. Texas’ rise as a data center powerhouse is in many ways a success story. Investments are pouring in 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 facing Texas now is not whether it should embrace AI. That’s already true.
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 lags behind industrial expansion – the imbalance becomes difficult to ignore. Or, as the Texans might say, 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 the way in AI without sacrificing its housing authority. That requires coordination among state leaders, local governments, developers and communities, as well as a willingness to ask hard questions before the next land deal disappears overnight. Texas has always believed in building for the future. The challenge now is to ensure that there is still room for families in the future, and not just for machines.
Data centers drink water like a small Texas town. A hyperscale data center can use ~550,000 liters of water per day, approximately what 30,000 to 50,000 people use in their daily lives. And they burn electricity like there is no tomorrow. These places draw 50 to 150 megawatts, sometimes more. A 100 MW data center consumes as much electricity annually as 70,000 to 80,000 households.
In short
A massive data warehouse costs over a billion dollars, drinks like a city and feeds itself like a city. That’s not a server room. That’s an industrial-sized beast. It is no longer a question of if. It happens. And I know some guys who might become billionaires and sell thousands of acres of data centers. Land originally intended for housing.
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