As Cities Turn to AI To Lower Housing Costs, Data Center Backlash Grows

The National Association of Home Builders (NAHB) reported that regulatory costs add $131,734 to the price of a typical home, representing 26.4% of the average $499,500 sales price. These costs have increased by nearly 40% in the last five years and are a significant factor contributing to the estimated housing shortage of over 4.03 million homes nationwide, according to Realtor.com® research. AI technology is being considered as a potential solution to reduce these regulatory burdens and streamline the permitting process, which builders encounter at multiple stages of construction. Jacksonville, FL, Mayor Donna Deegan announced an eight-point plan in August 2025 to expedite reviews and permitting, aiming to alleviate the city's estimated shortage of 50,000 affordable housing units. However, the development of data centers, which power AI, is facing backlash in cities due to issues such as depletion of water supplies and increased electricity bills, raising questions about whether AI is truly solving the housing affordability crisis or merely shifting its costs.