How the AI Boom Sparked a Housing Crisis in One Texas City

One chilly day in November 2025, community worker Mike Prado drove through Abilene, Tex., handing out blankets, socks, and jackets to unhoused individuals across the city. People sat on curbs, alleyway after alleyway, their meager belongings soaked by the previous night’s hard rain. Prado has worked in this community for a decade, and was once homeless in Abilene himself. Prado has witnessed difficult years—but the current situation was the worst he’d ever seen, he told TIME. 

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One man with a walker approached Prado outside of the Hope Haven offices—an Abilene nonprofit where Prado works, which operates a shelter and helps people with vouchers find housing—and accepted a jacket from him. “The AI plant took all the housing, man, I can’t find nothing,” he told him. “I can’t execute my voucher.” 

“I know, buddy,” Prado responded. “I’m having the same problem.” 

A year ago, President Donald Trump announced that Abilene would be the epicenter of America’s AI future. The West Texas city would be the first site of Stargate, a $500 billion infrastructure project to build data centers for future AI models, including ChatGPT. “AI seems to be very hot: It seems to be the thing that a lot of smart people are looking at very strongly,” Trump said at the White House. “Our country will be prospering like never before.”

Abilene leaders say that Stargate has already boosted many small businesses around town and will bring in millions of dollars a year in property tax revenue alone—even after accounting for the massive tax breaks they received. But the city is currently in the midst of a housing crisis, several local community workers and housing experts told TIME. They contend that the city was not prepared for the drastic economic changes the data center would bring, leading to tangible harms. Thousands of out-of-state construction workers have flooded the area, driving up rental prices and forcing vulnerable people to the streets. 

Abilene is not alone: these impacts are indicative of the massive, unpredictable changes that the AI industry is wreaking on society, which go far beyond the usage of the actual tools. “Knowing that the President came into office and immediately came up with, ‘We want to be at the forefront of AI,’ I’m not sure we had a tremendous amount of time to really plan,” says Gene Reed, the CEO of the Abilene Housing Authority. “We’re really in a challenging situation right now, because the housing market’s so tough, and it’s impacting a lot of other parts of low-income families’ lives.” 

Why Abilene? 

Abilene is home to over 100,000 people, and sits smack dab in the middle of Texas, about a three hours’ drive west of Dallas. Its infrastructure is spotty: the city has $110 million worth of street repairs needed, but only $7 million to spend on those projects in its latest budget. On the same waterlogged November morning, its roads were flooded and bumpy from years of neglect. “We have a slogan: ‘Turn Around, Don’t Drown,’ or else you’ll take your car for a swim,” Prado says. 

But Abilene is also an ideal site for data center builders, because it has lots of open land, ample wind and solar production incentivized by renewable energy tax credits, and a willingness from local officials to hand out massive tax breaks. In 2024, the AI infrastructure company Crusoe announced it would build a data center for AI workloads on a 900-plus-acre plot just outside the city. Months later, the site became the flagship location for Stargate, which is spearheaded by some of AI’s heaviest hitters: OpenAI, Oracle, and Softbank. 

Read More: Crusoe CEO Chase Lochmiller on Building the First Phase of Stargate

Organizers envisioned that the new Abilene data center would reach nearly a gigawatt of electricity by mid-2026, enough to power hundreds of thousands of homes. They then pushed construction forward at breakneck speed, in part to beat Chinese competitors in the international AI race. “No one in the history of man built data centers this fast,” OpenAI finance chief Sarah Friar told CNBC. 

In Abilene, that meant hiring thousands of out-of-state workers extremely quickly. And when these workers flooded into the city, their need for housing, combined with the city’s existing lack of inventory, drove up rental prices dramatically. According to Zillow, the Abilene average rent per month is $2,395, up $1,000 from a year ago. 

“Everyone was just excited it was coming,” Prado says, referring to the data center. “We didn’t think, ‘Where are we gonna put these people?’ Really, the people of Abilene suffer from that.”

Nowhere to Go

This increased demand directly benefits homeowners and landlords. “It’s just your basic economics in action: landlords understand that they can increase their rates, and they’re able to fill those with a lot of the folks that are working at the AI plant,” Reed says. 

But there isn’t enough housing to absorb these newcomers. Reed says that even before the data center, the city faced a housing shortage of about 5,600 units. Now, virtually all of the city’s motels, even the ones Prado considered so seedy he wouldn’t place clients in need, are full. So are the RV parks, to the point that the Abilene City Council scrambled last summer to greenlight two more RV parks to hold thousands of residents.

Multiple sources told TIME that there are employees at the data center living out of their cars, because they had nowhere else to go. Vicki Morris, an Abilene-based bail bondsman, says she bonded out a Stargate employee who was arrested for trespassing while sleeping in his truck outside of an apartment complex. Morris herself tried to move apartments several months ago, but was unsuccessful in her search. “Nobody can find a place to live,” she says. “Our city fathers didn’t think that AI center through very well.” 

These changes are weighing most heavily on the city’s low-income residents who were struggling to find housing to begin with. The Abilene Housing Authority issues vouchers to help them with housing, which generally expire within 90 days. Reed says that in years past, the agency was able to place 80% of clients within those 90 days. Now, he says that percentage is closer to 50%—and may keep decreasing, given that Stargate keeps expanding, and there is an influx of other data center projects in adjacent counties. 

“What used to take me 45 days to house somebody is taking me way longer, like 90,” echoes Prado. “Even if I had a million bucks, where am I going to put them?”

Reed says the Housing Authority has advised clients to look outside of city limits for housing, which poses a whole raft of potential issues. “We service a lot of elderly families, a lot of disabled families,” he says. “If we’re asking those individuals to move to other counties outside of the Abilene area, that just really presents a challenge for them to find the social services that they need in those outlying rural communities.” 

Rosten Callarman, the executive director of Abilene Habitat For Humanity, is witnessing the same predicament. He says for the first time, families, not just individuals, have been showing up to the town’s homeless encampments because landlords have doubled their rent. “I have to assume that it’s connected to the economic changes that are happening around Abilene, and that’s terrifying,” he says. “We want to be a place where families feel like they can be here and have an economic future in Abilene.”

Nathan Adams, a pastor at the Pioneer Drive Baptist Church and a partner of the West Texas Homeless Network, says that the city was already in “a crisis of not having enough emergency shelter to help with immediate needs.” He adds: “There’s a trickle effect: You’ll see more people on the street, and it can snowball from there.” 

Potential Benefits

The data centers’ defenders argue that while the project may have growing pains, it will end up being enormously beneficial for the city, bringing in infrastructure investment, job creation, and heaps of tax revenue. 

Doug Peters, president and CEO of Abilene’s Chamber of Commerce, says that in 2025, the city’s sales tax revenue increased 40% compared to the average of the previous four years, driven by the influx of data center workers. “When we can fund essential services for the residents of our communities because of that growth and enhance their quality of life, I think everybody wins,” he says.

In a statement to TIME, Abilene Mayor Weldon Hurt wrote: “Oracle’s data center has contributed thousands of direct jobs to Abilene and fueled the local economy by bringing more business to our hotels, restaurants, tradespeople, and countless others. “The city recently approved a 1000-unit housing project and continues to partner with the data center team to grow our community together thoughtfully and sustainably.” 

Over the course of 2025, Abilene’s City Council agreed to a series of massive property tax breaks for the data center’s continued expansion, most of them coming in at 85%. Tax agreements reviewed by TIME show that in order for the project to receive the tax breaks, it must spend upwards of $3 billion on capital investments and pay over 400 employees at $57,600 a year each. (Data centers require very few workers compared to warehouses, factories or office parks of similar sizes.) 

The Development Corporation of Abilene (DCOA) predicted in a 2025 document that the data center’s tax revenues—even while heavily curtailed by those tax breaks—would bring in over $22 million each year for the next 20 years. 

Officials argued that if they didn’t agree to the tax breaks, the project would simply go elsewhere. “The choice is not between $12 million or $4 million. It’s between $4 million or zero,” City Council member Brian Yates said in a council meeting in February.

This argument—that data centers would not come to locales “but for” tax abatements—has been questioned by some economists, including Timothy Bartik. “My view is that there are potentially some fiscal benefits of data centers, but the industry is vastly overstating them,” he told TIME last year. 

A representative for Crusoe said the company was a “long-term community partner,” while a representative for Oracle said the company was developing local training to “help residents obtain high quality jobs.” Both noted that the data center, once fully operational, is projected to generate up to a third of the City of Abilene’s budgeted property tax revenue for the fiscal year of 2025.

“Growth opportunities bring what some may consider to be challenges,” says Peters of the Abilene Chamber of Commerce. “We consider them opportunities to grow our region.” He added that “the market is positioned and working to respond to the increased demand for housing.”

“Money is pouring in temporarily, but as far as long-term benefit, I don’t know how that will pan out based on what has happened here politically,” says Cynthia Alvidrez, an entrepreneur who ran for city council last year. 

Residents worry that the data center is incurring other expenses on the city’s public goods: on water and electricity; on traffic management, because data center workers now clog the highway leading to the site every morning; on road repairs necessitated by truck damage; and on medical resources needed to tend to thousands of employees working long days in the Texas sun. 

“It’s all about the money, not the quality of life—and those lower on the socioeconomic ladder will feel the pain,” Alvidrez says.

Future Impacts

Abilene’s situation is uniquely bad in part because of the project’s massive scale. But other data centers have caused similar local disruptions, including Prineville, Oregon in 2016. In a paper from November, Brookings researchers warned that data centers could exacerbate housing shortages and draw skilled technical workers away from residential projects. 

Kasia Tarczynska, a researcher at Good Jobs First, says she’s increasingly learning about instances of data center-induced housing disruption from local communities. “This is becoming an additional harm to the data center industry,” she says. “And the harms are way exceeding any little financial benefits these localities may have.”

Back in Texas, Callarman of Abilene Habitat Humanity compares the current situation to the oil boom in the 80s, when that industry flooded Texas towns like Midland, only to exacerbate air pollution and leave a couple years later. 

“Once all of these data centers are built and those construction workers leave town, what happens then?” Callarman asks. “Is that going to lead to an economic downturn, or be a ‘rising tide lifts all boats’ scenario? We just don’t know, and it’s not like we have much of a say in the matter. We’re just riding that tide.”