A shake-up in the ranks of powerhouse cities
San Francisco fell from No. 1 and was supplanted by Provo, Utah, in the Milken Institute's annual ranking of big metropolitan areas with the best regional economies.
Why it matters: As the pandemic prompts people to move from pricey superstar cities to mid-tier ones where life is cheaper and easier, traditional powerhouses are being upstaged by smaller places focused on economic vitality.
Driving the news: What a difference a (pandemic) year makes: The 2021 Milken Institute Best-Performing Cities Index, released Wednesday, shows San Francisco, San Jose, Reno, Seattle and Dallas falling out of the top 10 places for job creation, wage growth, and innovation.
- "Large cities in the Intermountain West and South are outperforming many areas on the coasts, mainly due to their higher levels of short-term job growth and more affordable housing," Milken said.
- "For instance, Salt Lake City moves up 21 spots to come in at No. 4, and Huntsville, Alabama, has one of the largest jumps up in the rankings."
- "Housing affordability" and "broadband access" were added as new index criteria this year.
What they're saying: "A relatively new innovation center with significantly lower costs than Silicon Valley or Silicon Beach, Provo-Orem has attracted tech giants including Qualtrics, Vivint, and SmartCitizen, among others," per the Milken Institute, a nonprofit think tank.
The big picture: This seismic shift of people and power can be a boon to the smaller cities that prosper — attracting more companies, capital and citizens — but it can also have deleterious effects on the qualities people cherish about them, like affordability and middle-class values.
- Californians have been flocking to Idaho in such droves that they're pricing out locals, as Conor Dougherty writes in the NYT.
- "Home prices rose 20 percent in 2020, according to Zillow, and in Boise, 'Go Back to California' graffiti has been sprayed along the highways."
- Citing a recent study by Redfin, Dougherty says that "the budget for out-of-town home buyers moving to Boise is 50 percent higher than locals’ — $738,000 versus $494,000."
- "In Nashville, out-of-towners also have a budget that is 50 percent higher than locals. In Austin it’s 32 percent, Denver 26 percent and Phoenix 23 percent."
Details: Large metropolitan areas with the biggest gains in the Milken rankings — even though they didn't crack the top 10 — include Wichita, Kansas; Harrisburg-Carlisle, Pennsylvania; Albuquerque, New Mexico; Durham-Chapel Hill, North Carolina; Madison, Wisconsin; and Lincoln, Nebraska.
- The biggest losers in the rankings: Salinas, California; Elgin, Illinois; Santa Cruz-Watsonville, California; Lake County-Kenosha County, Illinois-Wisconsin; and Des Moines, Iowa.