Some home buyers are making purchase decisions based on the proximity of potential data centers, even as their construction becomes a lucrative revenue source in certain parts of the country, a new Redfin report says.
More than half, or 53%, of U.S. residents expressed opposition to
"Right or wrong, the perception is that data centers will change neighborhoods in a negative way," noted Matt Ferris, a Redfin agent in Northern Virginia, which has the largest concentration of the structures in the country.
"A buyer recently asked me, unprompted, to make sure there wasn't a data center planned near a home she was considering," Ferris said in a press release. Another Northern Virginia homeowner he assisted also mentioned to him they would have chosen a different location were they aware so many centers were nearby.
Survey findings showed anti-data center sentiment was most prevalent among older residents but declined with younger age groups. Almost two-thirds, or 65%, of baby boomers opposed such developments, an opinion also shared by 60% of Generation X respondents.
At the same time, less than half of the millennial and Generation Z cohorts said they were against data center construction, at 43% and 42% shares, respectively.
The results come from a
Compared to the majority of residents with negative views toward data centers, only 48% said they opposed converting existing homes into smaller units in an effort to increase housing supply in their community. Meanwhile, 39% said they would stand against a new apartment building, while 32% were opposed to mixed-use developments.
Financial windfalls come with political pushback
While data center storage capacity is needed for everything from household appliances
Fear of economic disruption may also factor into the current pushback against data centers, Redfin suggested. Approximately 58% of respondents believed the AI boom would eliminate jobs and make it challenging to afford a home.
The proliferation of data centers is bringing with it financial benefits to cities and counties as well, though, Redfin researchers noted.
"Because data centers are taxed largely through personal property taxes on computer equipment, that revenue can help fund growing budgets without putting the same pressure on residential real estate taxes," said Redfin senior economist Yingqi Xu.
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 over the last 15 years.
The monies collected, in turn, may drive a commensurate rise in spending to support local education and lower homeowners' property tax rates should jurisdictions choose to apply revenue to such initiatives, Redfin added. Both counties cut their real-property tax rates by between 8 and 20 basis points from 2022 to 2025, although rising home values are tempering some of the savings.
Still, data center developers looking to build elsewhere in the country have property- and sales-tax exemptions available to them, a point of contention with lawmakers across the political divide in several states.
Proposals for a repeal or moratorium on tax exemptions for data centers have come from politicians coast to coast, with efforts bringing mixed results. Recent bills in Georgia and Pennsylvania legislatures were either vetoed or failed to advance, despite wide bipartisan support.
On the other hand, new legislation in Oregon now freezes tax exemptions for new developments for one year. A recently signed executive order in Nebraska also removes tax incentives for data center operators in the Cornhusker State.
In his current campaign for reelection, Texas Gov. Greg Abbott has specifically targeted data centers in public appearances, saying he will prioritize eliminating sales tax exemptions currently offered to their owners in the normally business-friendly state.
Such efforts may be short-sighted, according to data center industry advocates, who point out that much of the current boom comes directly from rising consumer demand. As more of the world comes online, uncertainty surrounding the cost of building could lead to unwanted challenges in the future if incentives are removed.
"That sends a worrisome signal to industry, especially when this is a high-capital industry that does really rely on having predictable and secure tax and regulatory environments," said Khara Boender, senior manager, state policy at the Data Center Coalition, in a recent interview.
