How Data Centers Are Making It Harder for Americans To Get Housing
Newsweek · C · trust 50/100
0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. Data center developers are paying "impossible prices" for land and outbidding homebuilders, leaving them to face a "losing battle" just as the U.S. housing market is short of millions of affordable homes, according to a new report.
The National Association of Home Builders (NAHB), which represents more than 140,000 members among homebuilders, residential developers and remodelers, published research on its website that mentions examples of data center developers outbidding homebuilders.
In the "data center alley" of northern Virginia, home to more than 300 data centers, developers are paying "impossible prices" to secure land, NAHB said. One of the biggest land deals closed in the area since 2024 involved SDC Capital, which paid $615 million for 97 acres on the south side of Cochran Mill Road immediately north of the Washington and Old Dominion Trail in Loudoun County, amounting to about $6.3 million per acre.
Loudoun County houses 176 data centers, more than double the number of any other U.S. county.
In Prince William County, Microsoft paid $465.5 million for about 124 acres in 2024, or about $3.75 million per acre. Prince William County has 77 facilities, the third-highest concentration nationwide.
In Fairfax County, Starwood Capital Group agreed earlier this year to buy roughly 42 acres of county-owned land in Chantilly for $166.8 million, or about $4 million per acre, paving the way for the construction of a data center. The company has plans to build two data centers in Fairfax County, near the Alexandria border.
In March, Amazon agreed to buy George Washington University's roughly 120-acre Virginia Science and Technology Campus in Ashburn for $427 million, or $3.5 million per acre. The deed would allow Amazon to build a data or information technology center on the site, the campus student newspaper reported.
Newsweek contacted Amazon, Microsoft, Starwood Capital Group and SDC Capital for comment by email on Tuesday morning. The Data Center Coalition, an advocacy group made up of most of the country's large data center operators, was also contacted for comment.
Over 1,500 new data centers are in development nationwide, according to Pew Research Center. The Berkeley Research Group puts that number even higher, estimating about 3,000 data center projects at various stages of development nationwide.
The rapidly growing demand for more land for data centers—which are used every time someone interacts with an AI chatbot or assistant or uses a cloud-based software—is being met with land "that would otherwise have become housing," according to NAHB.
This is particularly important as the country, despite ups and downs in the housing market and significant regional differences, still faces a severe affordable housing shortage. In a report published earlier this year, White House economists estimated that the nation had a shortage of 10 million homes .
Estimates of the national shortage vary, with Realtor.com saying the nation was short of 4.03 million homes last year and Harvard University's Joint Center for Housing Studies reporting that the gap of affordable housing units amounts to 7.2 million units. According to NAHB, the nation needs about 1.5 million more homes.
Whatever the exact number, experts and officials agree that there are not enough homes in the U.S. to meet demand and make housing affordable again. In Virginia and its "data center alley," there is an estimated shortage of about 188,000 market-rate homes, the Virginia Association of Realtors told the Virginia Housing Commission in 2025.
Now homebuilders are saying that competition from data center development might be hindering desperately needed new home construction.
"A builder's land budget is capped by what home buyers can afford. Every dollar spent on land gets passed through to the price of the finished home, and buyers have no room to absorb it," NAHB wrote in its report.
That is why homebuilders cannot compete with the prices data center developers are paying for land. A 2025 analysis of Virginia land prices reported median land prices of about $125,000 per acre in Loudoun County and $93,750 per acre in Prince William County.
While these numbers are approximate and cannot be compared exactly with prices paid by data center developers, they are still useful to highlight how much more said developers are willing to bid for land—30-50 times more than homebuilders, according to NAHB.
"When a landowner gets an offer of several million dollars per acre from a data center company, and a fraction of that from a home builder, there is no real decision to make," NAHB wrote.
"The result is not more expensive homes on that parcel," it continued. "It is no homes at all. The data center wins, the land is gone, and the houses that might have been built there are never built."
Americans know how much the nationwide housing affordability crisis is weighing on the country, pricing millions of people out of the market and making homeownership more expensive for those who have already stepped onto the property ladder.
Northern Virginia, the epicenter of the country's data center saga, is no exception, with homes becoming more expensive and the availability of affordable options vanishing. The Northern Virginia Association of Realtors reported that the median price of a home in the area reached $750,000 last year, up about 54 percent over the past decade, and that the average age of a first-time homebuyer in the region had risen to 40.
As the race to expand and dominate the AI market continues in the U.S., the problem is likely to spread to more and more states. Stream Data Centers bought and razed 55 homes in Elk Grove Village, Illinois, to make way for a three-building data center campus of about 2 million square feet.
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