This is article from The Atlantic in March 2009.
How the Crash Will Reshape America
This article was written by Richard Florida, an author / professor known for "Rise of Creative Class" and "Who's Your City". In order for me to determine which cities to invest, his books and thesis has been very helpful.
Richard Florida's Website
It is very long article but I highly recommend that you read this IF you are real estate investor or IF you are in evaluation of relocation to new place.
In summary, he concluded that winner is "the great mega-regions that already power the economy, and the smaller, talent-attracting innovation centers inside them that can accommodate and accelerate invention, innovation, and creation".
Here is summary of winning and declining cities:
New York City -> Winner
- "Hub" of Boston-New York-Philadelphia-Washington DC "mega-region", the largest metropolitan area in USA.
- Will keep leadership role as global finance, media, design, art, entertainment, fashion, technology.
Hub of Mega-Region -> Winner
Chicago - Leadership in industrial management and regional hub for law and finance, stealing "creative jobs" from second-tier mid-western cities.
Los Angeles - Center of Southern California mega-region and global hub for media and entertainment.
Miami - Center of South Florida mega region and finance center for Latin America.
Cities with Creative Class with Advanced Degree -> Winner
- Nowaday's economic innovation and accumulation of wealth takes place at cities with creative class with advance degree.
- Typical cities are Seattle, San Francisco, Austin, Raleigh, and Boston
Rust Belt Cities -> Decline
- Manufacturing jobs used to be 32% of total jobs in 1950 but it has dropped to approx. 10%. This trend will continues.
- Rust Belt cities (such as Detroit) will see larger challenges in population growth, abandoned houses, high employment, low-educated workforce and defection of "creative jobs" to regional hub city.
Real Estate Driven Sun Belt Cities -> Decline
- Typical example is Las Vegas and Phoenix.
- These cities relied too much on real estate related economy growth --- it takes really long time to recover from this bust.
- Other industries in these cities are also suffering; retirement; tourism; low-end manufacturing jobs.
Sprawling Exurb -> Decline
- The economy depends on generating and transporting ideas. The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas.
Next Economic Landscape
- It will likely be sparser in the Midwest and also, ultimately, in those parts of the Southeast that are dependent on manufacturing.
- Its suburbs will be thinner and its houses, perhaps, smaller.
- Some of its southwestern cities will grow less quickly.
- Its great mega-regions will rise farther upward and extend farther outward.
- It will feature a lower rate of homeownership, and a more mobile population of renters.
- In short, it will be a more concentrated geography, one that allows more people to mix more freely and interact more efficiently in a discrete number of dense, innovative mega-regions and creative cities.
- Serendipitously, it will be a landscape suited to a world in which petroleum is no longer cheap by any measure.
- But most of all, it will be a landscape that can accommodate and accelerate invention, innovation, and creation—the activities in which the U.S. still holds a big competitive advantage.
- Hub city of mega-region
- Niche Creative center such as Silicon Valley, Boulder, Austin, and the North Carolina Research Triangle
I have been following Mr. Florida's books and thesis to fine-tune my real estate investment strategies and to select cities and locations. Thus my real estate investments are in "winning cities" (Austin, San Francisco and Manhattan) and in close-in central locations. I have recommended same strategy for my clients. So far so good.