As tech giants push deeper into rural America to construct massive data centers, mortgage lenders and appraisers are being forced to rethink local market dynamics, even though early housing data shows little immediate impact on home sale prices.
The proportion of U.S. single-family home sales occurring within 5 miles of a large data center doubled from 0.67% in 2018 to 1.5% in 2026, and is projected to reach close to 2.3% by 2027. This rise is driven entirely by the opening of new facilities in new geographical areas rather than increased sales activity near established facilities, according to a recent report by
New data centers are moving farther out into rural territory. The median new large facility opened in 2026 sits in an area with 32 residential housing units per square mile and is located approximately 27 miles from the nearest major metro center.
There is also a transition to build-outs in lower-income communities. Between 2020 and 2023, new data centers primarily opened in above-average income ZIP codes. However, for 2026 and 2027 pipelines, openings have shifted into ZIP codes slightly below the national median household income.
There are 1,152 operating data centers in the US with a combined capacity of 53,709 megawatts [MW], and 1635 planned projects that would add 365,931 MW of additional capacity, according to Cleanview, a data center tracker. Unlike other commercial buildings surrounding residential areas, these buildings use large amounts of water and electricity and could change the housing markets surrounding them.
But data centers are not new or just limited for AI use. For decades, companies used them to store and transmit information. Now, however, there is a surge in demand as training AI models requires storage for processing massive datasets through thousands of specialized, heat-generating chips. The rise in demand is causing these facilities to prop up in many neighborhoods, acting as powerful, resource-heavy buyers, competing with local residents.
"They use the same contractors and materials as large residential buildings. And we're seeing the data centers outbid local builders for electricians and materials," said Allie Barefoot, host of Cotality's Data in Context in a podcast episode.
The 2026 housing market is much slower than previous years as
There are two types of data centers. One is large facilities made by hyperscalers, which have mostly been built outside of urban areas. Co-location facilities, however, are built closer to cities, where the bandwidth is leased to individual companies who want greater access. It is these smaller facilities that are at odds with the local communities, the opposition becoming a concern for S&P Global when rating these contracts.
"Legal lawsuits are now common for the data center operators, so the questions that we are asking is, you know, whether they have zoning and appropriate approvals in place before they can start construction," said Dhaval Shah, director of digital infrastructure at S&P Global.
Property values - and tax breaks - could rise around data centers
Virginia has the most data centers in the country with 371 operating and another 421 planned. Lowden County within Northern Virginia is an example of what happens to property values when data centers enter a community. The area is the largest data center market in the world and the industrial clustering has increased demand for surrounding property.
Property values are higher the closer one is to one of these sites, according to a 2023 study by George Mason University.
The average household in Loudoun County also pays less in property taxes compared to surrounding counties, explicitly because of the excess evaluations from the data centers, according to Terry Clower, co-author of the paper.
"If I'm thinking about data centers from an underwriters perspective, they would be concerned if they thought there was a long term risk to the value of the property, but the evidence, at least in our market, does not support any concerns," said Terry Clower, Northern Virginia Chair and professor of public policy George Mason University.
Personal property tax revenue coming from physical assets, such as data centers, increased at a rate of 639% and 349% per resident in Northern Virginia's Loudoun and Prince William Counties
Yet, rising electricity rates could balance that out. Major transmission lines are to be built through some of the neighborhoods in Loudoun County, which has been met with local opposition.
"Taxes have gone down, but power prices there have gone up a little bit, so there's a bit of an offset, depending on who you're talking to," said Kelly Morgan, research director at S&P global.
Still, buyers still want to live in desirable markets despite data center presence. For real estate agent Kim Spear with Spear Realty Group based in Ashburn, Virginia this has also not impacted people's demand for homes around the area. Property values have gone up in her district. While buyers have asked about being close to data centers during closing, she says that the demand for housing in the area overshadows concerns.
"I think it's still going to be a work in progress in terms of how it's all going to affect our local market," said Spear, who has been serving this community for 23 years.
Rising public opposition to data center development
There have been more delays and cancellations of data center work in the first quarter of 2026 compared to the entirety of 2025. At least 75 projects valued at approximately $130 billion across 29 states were blocked or delayed during Q1 2026, based on projects with publicly disclosed investment values alone, according to a Data Center Watch report. Some states are
"This friction happens because the timeline of capital deployment is faster than the timeline of civic planning," said Amy Gromowski, head of Data Science at Cotality.
