Fastest Growing U.S. Cities 2017, According To Forbes
Every year, Forbes releases a list of “fastest-growing cities.” In 2017, six of the top 10 were located in Florida. This type of list can be a great conversation starter, but sometimes investors can be misled into thinking a city on the list is automatically a good place to invest. Understanding how these lists work is the key to using them to pick good real estate investments.
For the Forbes list, analysts use Moody’s Analytics data, data from the Census Bureau, and information from the Bureau of Labor Statistics, the Bureau of Economic Analysis, and Fannie Mae and Freddie Mac to compile a list of “fastest-growing” cities. The term “fastest-growing” does not just mean that they are getting bigger, either.
“The aim…is to give a holistic picture of places on the upswing,” explained Forbes writer Samantha Sharf. She added, “That means looking not just at job, population, or output growth individual, but considering how these important measures and others come together.”
Forbes ranked Cape Coral, Florida, first on its top-10 list, thanks to 3.54 percent job growth rate last year and a projected population growth rate of 3.61 percent this year. Moody’s predicted that Cape Coral would also have 3.83 percent job growth this year along with 6.82 percent output growth “thanks to expanding hospitality and housing markets,” Sharf said.
In economic terms, output growth is, at its simplest, the amount of “stuff” that is produced by an economy. That “stuff” includes not just manufactured products, but also the number of services that are provided and the value of that “stuff” in dollars. Because some types of stuff are more valuable than other types, economists try to reduce everything to a dollar amount when they compare one area’s output to another.
This means that a city with an output of smartphones and cutting-edge IT services will have a higher output than a city with a similar level of output of socks and lower-skilled services, although that is somewhat variable since the value of output depends partly on location. For example, if I have an output of air conditioners and AC servicers but I live in Siberia, that output may not be as valuable in that location as it would be in the Sahara Desert.
For real estate investors, output data is most valuable when used as Forbes is using it, to assess markets and their potential. Say that you reviewed the fastest-growing cities list back when it first came out, this past February, and decided that Florida was definitely an area of interest for you when it comes to building your investment portfolio.
That probably means you would have been looking at Cape Coral, Orlando, Daytona Beach, Jacksonville, Sarasota, or Tampa. All of these cities are in the top 10 on that list and have experienced pretty fantastic appreciation (nearly all in the double digits) as well as have good wage growth statistics and good population growth projections for 2017. They all are, at least from first glance, good potential locations in which to invest.
Let’s look at Orlando, Florida, in a little more detail now that we are six months into 2017 instead of less than two to see what has happened in that area since the initial Forbes list came out.
According to data from CoreLogic, the Orlando-area housing market, which was hit particularly hard during the housing crash, may finally be less than a year away from its peak prices in 2006. Furthermore, home price growth has held steady from what Forbes reported for last year in 2017 as well, with the entire Central Florida area’s home price index rising by 7.7 percent (well over the national average and the state average as well).
Negative home equity is also on the decline in the area, which bodes well for homeowners who want to “move up” but have been unable to do so because they did not have the equity to pay off their home loan when they sold.
When you combine this growth with an interesting common perception about certain zip codes in Orlando that are generally considered to be “not the most desirable areas” according to Phil Freeman, the owner of Love Central Florida Group at Keller Williams, you have a very unique situation for a savvy real estate investor. Freeman told the Orlando Business Journal back in late 2016 that he believed that area around the University of Central Florida’s campus expansion in Orlando would be a “gold mine” for real estate investors looking to add to their rental portfolios.
While college campuses do not always attract owner-occupants, they do attract renters not just in the form of college students, but also young professionals, both single and with families, who are employed by the college. Furthermore, college towns have great output in terms of skilled workers and tend to offer steady employment.
These factors likely played into Orlando’s place on the Forbes list early this year, and clearly are coming to fruition nicely as 2017 progresses, and a number of other companies are also moving into the area, such as KPMG, a professional services firm that is developing a $400-million campus in the area in order to leverage the long-standing attractions of good weather and theme parks for conventions and other meetings.
Wondering about the other cities on that fastest-growing list? No problem! Here are the top 10 from number 1 to number 10:
- Cape Coral
- Provo (Utah)
- Daytona Beach
- Seattle (Washington)
- Portland (Oregon)
- Salt Lake City
All of those cities are definitely still performing four months after the list’s publication, but Florida cities, and Orlando in particular, appear poised for particular growth as we move into the latter half of 2017.
Unfortunately, if you’re looking to acquire property in these metro areas, you will have competition. The word is out that these areas are growing, and property values and rents are on the rise. Good deals go into contract often on the same day they are listed. You have to be able to move quickly – or have a local team to help you.
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