Economic Center Blog - Original Article
Our Economic Opportunity Index ranks cities by both their economic prospects and housing affordability, providing a way to identify the places where job opportunities are high and homeownership is more attainable. To determine the economic prospects of a market, the index measures recent growth in America's advanced industry sectors, the top 50 R&D and STEM worker-intensive industries as defined by Brooking's analysis of Moody's Analytics data. The higher the growth rate of advanced industry jobs, the greater the economic prospects for young professionals in that market. In the figure below, the size of the bubble is the total number of advanced industry jobs in 2015. To measure housing affordability, we used our Real House Price Index (RHPI), which tracks the affordability of homes after accounting for income levels and interest rates. The lower the RHPI value, the more affordable the market.
In the figure, cities in the lower left corner feature expensive housing and have low advanced industry job growth and, therefore, the economic prospects for young professionals living in these cities is lower. Cities in the upper right are where housing is more affordable and advanced industry job growth is high. These are cities with greater economic prospects for young professionals. The size of the bubble measures the total number of advanced industry jobs in the market in 2015, and the markets are colored by our final ranking of Economic Opportunity. The bluer the bubble, the higher the rank.
It's no surprise that San Francisco is one of the cities the largest and fastest growing industry employment, but housing is relatively unaffordable. Conversely, Cincinnati housing is affordable, but it lacks a large or growing number of advanced industry employers. Seattle, the location of Amazon's current headquarters, is in the middle of the pack in terms of our housing affordability measure, but the pace of advanced job growth is quite low.
Tennessee and North Carolina are home to four of the top five cities in our Economic Opportunity Index:
- Memphis, Tenn.
- Charlotte, N.C.
- Raleigh, N.C.
- Nashville, Tenn.
- Kansas City, Mo.
All of these cities feature affordable housing markets and strong advanced industry job growth, so perhaps they will make Amazon's shortlist for its second headquarters. After all, they are all cities where advanced industry job opportunities are high and young professionals can still afford to buy homes.
Pat Murfey, CCIM specializes in Commercial Properties with Kansas City based real estate brokerage Evergreen Real Estate Services. Pat can be reached at 913-951-8402 or Pat@KCEvergreen.com.
Kevin Tubbesing, CCIM, is a Principal with Kansas City based real estate brokerage Evergreen Real Estate Services. He can be reached at 913-562-5608 or Kevin@KCEvergreen.com.