Brainy Cities Make Good Real Estate Investments

The American Community Survey’s report chronicling where brainy college graduates have moved to in the last ten years seems to mirror reports on where the housing market has remained stable.

Any list of good housing markets will include Raleigh and Austin. These areas are gaining in population. They came into the decade with low-priced housing. They have an ideal mix of suburban areas with good schools.

Any list of top cities for attracting college grads will include Raleigh, Kansas City, and Austin. Raleigh managed to add college graduates at an annualized rate of 1.6 percent over the last decade.

Forbes seems to think that it is nothing but blue skies in Raleigh. According to Forbes, Raleigh is the best big city in America to get a job and the best big city in America for young people.

Kansas City is ranked highly for a number of reasons. Unlike the biotechnology and information technology hubs in Raleigh and San Francisco, Kansas City is making things happen through its natural ability to act as a crossroads for research in agriculture. Tomorrow’s miracles in farming are coming out of Kansas City.

As usual, Joel Kotkin disagrees with American’s other city experts, Edward Glaeser and Richard Florida, on the forces that make these changes happen. Kotkin loves to rebuke the idea that coffee shops and bike trails make young people move from Omaha to Seattle. He puts it squarely on the availability of suburban housing. Kotkin does have a point. Raleigh has plenty of great suburbs, and the downtown is pretty boring. Nashville, Birmingham, and Kansas City – each a top ten on more than a few lists – are really sprawling metros where people come to raise a family on the outskirts of town.

Edward Glaeser doesn’t think much of bike paths, either. Glaeser is another academic who believes that human capital is the new economic force in our country. But he diverges from Florida because of his faith in how the cost of housing drives the migrations of brainy people. Glaeser says that smart people are no different than anyone else. They want to have a reasonable mortgage. Glaeser believes that the best way to kill a city is to put plenty of land use restrictions into place. Glaeser’s favorite city is Houston. I have to think that this is enough of a reason to completely ignore anything that he says. Woody Allen once said that the best thing about Los Angeles is that you can turn right on a red light. Maybe Woody never went to Houston. Turn right into the wrong subdivision and you are likely to run across a waste treatment plant or a private zoo.

Richard Florida’s work has made him an academic superstar. If you like to think about cities, then you already know that Florida is the person putting forth the idea that the best cities are the ones with the most baristas.

These factors carry over into real estate. Forbes goes on to say that Raleigh-Cary is the best city in American for anyone that wants to invest in real estate. Austin comes in at number three.

Forbes picked the nation’s biggest basket case, too. It isn’t Las Vegas, Phoenix, or Detroit. Turns out that the last place in the country that a person should buy real estate is none other than Lakeland, Florida.