The vast data centers needed to power artificial intelligence are in high demand, and Texas is at the center of a new boom to build the physical infrastructure behind the digital revolution.
Due to its relatively cheap electricity, abundant land, and business-friendly policies, Texas has seen rapid growth in data centers, especially the facilities needed to run the energy-intensive computations that power AI.
Texas is ground zero for Stargate, a joint venture between OpenAI, SoftBank, and Oracle, to invest up to $500 billion in AI infrastructure, which President Donald Trump announced in January.
The project’s first 10 data centers are already under construction in Abilene, TX, with another 10 planned there, according to Oracle CEO Larry Ellison.
As of September, Texas already had 279 data centers, with 141 of those located in and around the Dallas-Fort Worth metro area, according to the Texas state comptroller.
“Texas’ business-friendly policies mean that the state’s economic footprint continues to grow,” says Realtor.com® senior economic research analyst Hannah Jones. “Texas has the fastest-growing job market in the country, which creates the need for more housing.”
Will the data center boom affect Texas home prices?
The data center boom will likely drive up property demand and increase home prices in certain key areas.
Texas is already enjoying strong economic and population growth, and new data centers are likely to draw additional workers with jobs in construction, IT, and related industries.
Key areas to watch include parts of the Dallas-Fort Worth metro, where multiple data center projects are in the works, including campuses in Red Oak, Grand Prairie, Lancaster, and Garland.
The massive Stargate project in Abilene could also stoke housing demand in the city of about 130,000.
“Texas has kept up with climbing housing demand considerably well, but affordability challenges persist in the state,” says Jones.
“Though inventory levels are relatively high in the state, it will be important for construction to continue to keep pace with job growth to ensure job seekers can find affordable housing options.”
Can the Texas grid keep up with demand?
The data center boom is creating new jobs and powering new hubs of tech innovation in Texas.
But it also has the potential to drive up industrial and residential land prices in the state, and raises questions about whether the state’s energy grid can keep up with demand.
Texas is unique among the states in that it has an independent electrical grid with no interconnections to out-of-state providers. The arrangement allows Texas to avoid federal energy regulations, but means the state is on its own to meet demand for electricity.
“How we have the energy needed in order to drive all this technology, I think, is not really being talked enough about,” U.S. Rep. Marc Veasy, a Texas Democrat, said during a fireside chat at SXSW last weekend.
“The energy conversations that we always have in DC are very controversial, because no matter what sort of energy it is, someone can find a way to be against it,” he said.
Last month, nuclear technology startup Last Energy announced plans to build 30 small modular nuclear reactors near Haskell, TX, to help power the state’s AI data center boom.
The company said it had already filed for a grid connection with the Electric Reliability Council of Texas (ERCOT) and was preparing to file for a permit with the U.S. Nuclear Regulatory Commission.
“Last Energy’s microreactor project in Haskell County will help fulfill the state’s growing data center demand,” Texas Gov. Greg Abbott said in a statement. “Texas is the energy capital of America, and we are working to be No. 1 in advanced nuclear power.”
Speaking at SXSW, Veasy also praised the nuclear project as embracing an “all of the above” approach to power generation, and noted that about 30% of the ERCOT grid relies on renewable energy.
“It really is going to be all hands on deck to be able to power us into this new age of technology,” he said. “We already have the groundwork here to be able to be the leaders in the model, not just for the United States, but I believe the world.”