He Doesn't Want a Data Center 400 Yards From His Home, but One Is Coming Anyway. Dave Ramsey Says, 'The Drama Is Always Worse Than The Reality'

A 1 million-square-foot data center is being built about 400 yards from a retired Phoenix homeowner's paid-off house. He cannot prevent the development, so he is trying to decide whether to sell before it is completed or wait and risk watching his home's value fall.

Scott brought the problem to "The Ramsey Show" recently, explaining that local real estate professionals have warned him the development could reduce nearby property values by as much as 25%. He estimates his primary home is worth roughly $600,000.

Selling Now Could Lock In the Fear Discount

Scott and his wife are in a strong financial position. They also own a mountain home worth around $600,000 and recently inherited another house that should net them approximately $416,000 when its sale closes. Still, a potential 25% loss on their primary residence would be difficult to ignore.

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His concerns include noise and the development's broader environmental footprint. However, the land was already commercially zoned, meaning a warehouse or another large development could have been built there anyway.

Personal finance personality Dave Ramsey focused on the difference between what people fear will happen and what actually happens after construction is finished.

"The unknown is more scary than the actual known," Ramsey said.

Because the data center is already going up, Ramsey believes Scott may be better off waiting another year. By then, homeowners should have a clearer idea of how much noise it produces and whether it has any measurable effect on nearby sales.

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Ramsey warned that selling now could mean accepting a steep discount based entirely on uncertainty. A buyer would know about the project and might demand a lower price because of everything that could go wrong, even though nobody yet knows what the finished data center will be like.

"I'm pretty sure you're going to sell your house too cheap if you sell it right now," Ramsey told Scott.

Look for Evidence From Comparable Neighborhoods

Ramsey recalled owning property near a proposed Walmart (NASDAQ:WMT)/a>. Neighbors predicted the store would devastate property values, and the opposition included angry meetings and public protests. Yet about 18 months later, property values in the neighborhood had increased.

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He stressed that his experience doesn't prove the data center will have no effect. Instead, it illustrates how predictions made during the most emotional stage of a development can turn out to be badly exaggerated.

Co-host Jade Warshaw suggested studying communities with similarly sized data centers located close to homes. Scott could examine what happened to sale prices after those facilities had operated for at least 18 months. She also suggested watching whether neighbors begin listing their homes and, more importantly, what those properties actually sell for.

"The drama is always worse than the reality," Ramsey said, while adding that this is not true in every case.

Scott has something many worried homeowners would not: enough wealth and flexibility to avoid making a rushed decision. Unless research uncovers convincing evidence of serious damage to nearby values, Ramsey would let construction finish, allow emotions to settle and judge the data center by its real impact.

Image: Shutterstock

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