Homebuilders Accuse Data Centers of Snapping Up Land at ‘Impossible Prices’

Data center developers could be vexing the housing market by out-bidding homebuilders, at least in one fast-growing area.

In a research piece published on its website, the National Association of Homebuilders looked at a few examples of data center developers outbidding other prospective users of the land. Specifically, it looked at several instances of data center developers in the “data center alley” of Northern Virginia, the heaviest concentration of data centers in the nation.

In one case, a data center developer started offered Ashburn, Virginia homeowners $4.4 million per acre so it could assemble a larger site. Meanwhile, median land prices came to about $125,000 in the rest of Loudoun County.

“As AI use has grown, so has demand for the facilities that make it possible,” NAHB said in its post, noting $300 billion in spending plans from Microsoft, Google and Meta and Amazon. “That demand is being met with land, and much of it is land that would otherwise have become housing.”

Data centers are a flashpoint in the public eye, with some residents complaining about their potential impacts on power and water usage in neighborhoods. Data center advocates have pushed back on some of those concerns, and expert findings have been inconclusive.

But data center projects are being pitched in fast-growing areas like Texas, Central Ohio, and Northern Virginia, where home values have inflated with the growth of the Washington D.C. metro. The potential for a competing user for that land could complicate supply-constrained housing markets.

Realtor.com reached out to the Data Center Coalition, an advocacy group made up of most of the nation’s large data center operators, for comment. The group recently posted to X to refute arguments that data centers lower nearby home values or cause them to rise more slowly.

Data Center Alley fights

Northern Virginia communities, like those of many other cities, have taken aim at restricting or slowing the development of data centers. State lawmakers have mulled sunsetting the state’s tax breaks for data center developments.

Gov. Abigail Spanberger recently pushed for data center developers to cover the cost of new infrastructure to offset their impacts. But the state’s D.C. suburbs, which account for a third of its population, have seen median prices up 54% over the past decade, the Northern Virginia Association of Realtors found.

“Every acre that moves into the data center pipeline makes those numbers worse,” NAHB said.

Other states and cities around the nation have taken action to delay or restrict data center development to study its effects,

Nonetheless, data center construction has grown rapidly in the Northern Virginia suburbs, whose significant fiber and infrastructure networks date to the founding of the internet.

Virginia’s Joint Legislative Audit and Review Commission looked at the outcome: While data centers provide positive economic benefits to communities, they also impact nearby residential areas.

The report found they raise energy costs and raise new questions about how the government should regulate impacts like noise and data center developments close to neighborhoods.

Larger trends

Nonetheless, data center construction activity continues to surge. The Associated Builders and Contractors reported Monday that data centers are propping up the larger construction industry as homebuilding and other kinds of construction slowed.

Data center construction rose 7% in June compared to the month prior. It’s also up 46% from June 2025, ABC found. Excluding data centers, non-residential construction was down almost 8% from last year.

“Contractors working on data centers continue to benefit from this momentum,” ABC Chief Economist Anirban Basu said in a statement.