The U.S. Cities Profiting The Most In The Stock Market And Housing Boom

If anything positive can be said for the current tepid economic recovery, it has been very good to those who invest in the stock market or own real estate.

Property owners have been able to reap higher rents and sale prices, and the stock market has soared while the overall economy has registered only modest gains. However, only a precious few have benefited from the bull market on Wall Street. According to Pew Research, only 47% of American households own some stock, down from nearly two-thirds in 2007.

And of those who do own equities, the upper crust control the lion’s share. As of 2010, the wealthiest 20% of U.S. households held 91.7% of all U.S. stock; the top 5%, a shade over two-thirds; and the top 1% controlled 35%.

While incomes for the middle and working class have stagnated in the recovery, the booming stock market helped swell the income of the top 1% by 31.4% through 2012. Overall, the rich now account for 50% of the country’s wealth, more than at any time since 1917, when the income tax was introduced, and well above the level in 1928, at the end of the Roaring Twenties stock boom.

Just as the current asset-driven recovery has had disparate impacts depending on social class, it has affected different regions in divergent ways. To gauge which areas have benefited the most from asset inflation, Mark Schill, head of research at Praxis Strategy Group, looked at the percentage of income derived from rents, dividends and interest in the nation’s 52 largest metropolitan areas and 100 most populous counties.

The Codger Economy

The top of our list is dominated by areas where retirees and aging boomers, particularly the more affluent, are concentrated. Some 57% of Americans aged 50 to 64 own stock, according to Pew, twice as high a percentage as those under 30. People over 55 control well over half the nation’s wealth.

Also as they reach retirement, seniors are less likely to be earning income from wage and salary work, further driving up the share of income from rents, interest and dividends in retirement hot spots. The most well-to-do retirees are the most likely to become migratory snow birds, clustering in the nation’s warmest climes.

This includes the top five metro areas on our list, led by the Miami-Fort Lauderdale-West Palm Beach Metropolitan Statistical Area, where roughly 26.5% percent of income was earned this way in 2012, compared to a national average of 18.2%.

It’s followed by Tampa-St. Petersburg-Clearwater, Fla., and San Diego-Carlsbad, Calif.

These trends are even more evident when we look at the nation’s 100 largest counties. The top of the list is dominated by wealthy retirement counties, led by Palm Beach, Fla., where a remarkable 39.8% of income comes from stocks, rents and interest payments. It’s followed by two other affluent Florida counties: Lee (39.6%), whose largest city is Cape Coral, and Pinellas (29.1%), which is the home county for both St. Petersburg and Clearwater. Other retirement counties at the top of the list include No. 7 Broward (Ft. Lauderdale) and Pima, Ariz., which contains the city of Tucson.

Superstar Cities

The surge of profits for investors also boosts incomes in some of the metro areas whose economies have done the best overall in the asset-driven recovery. This is most marked in the San Francisco Bay area, which added more billionaires  last year than anyplace else in the country.

San Francisco-Oakland-Hayward ranks sixth on our metro area list, with 20.7% of residents’ income coming from rents, dividends and interest, and San Jose-Sunnyvale-Santa Clara comes in seventh (19.3%). This places them well ahead of traditional centers for plutocrats, such as Boston-Cambridge-Newton (16th) and, remarkably, the home of Wall Street, the primary beneficiary of asset inflation, New York-Newark-Jersey City (23rd).

Our counties list offers a more precise map of where asset-driven wealth is, showing that much of it is concentrated in the suburban reaches. Although much of the hype about new billionaires revolves around San Francisco, the real star in the Bay Area is somewhat more prosaic San Mateo County (fifth on our county list), home to tech giants such as Genentech and Oracle , and seven of the 10 largest venture capital firms in the Bay Area. In contrast, San Francisco County ranks 36th.

This diversion in the patterns of where investors and rentiers congregate can also be seen in the sprawling metropolitan area that contains the nation’s financial capital, the 19 million-person New York region. Greater Gotham is home to a remarkable four of the top 15 counties on our list, starting with No. 4 Fairfield County, Conn., a major center for the hedge fund and private equity industries, followed by two affluent suburban counties, Westchester (ninth) and Nassau (13th).

Among the five boroughs only one, No. 14 Manhattan (New York County) ranks in the upper echelon, while three outer boroughs — Queens, Brooklyn (Kings County) and the Bronx — are in the bottom 15 of the 100 largest counties. The heavily minority and poor Bronx ranks last.

Strongest Economies At The Bottom

Not surprisingly, many of the metropolitan areas at the bottom of our ranking are older Rust Belt towns, such as Cleveland-Elyria (44th) and Detroit (46th). These are places where poverty is more concentrated and much of the money has moved away, often to Sun Belt locales such as Florida.

However, the bottom of our list also features many of the nation’s most dynamic economies, including Raleigh, N.C. (43rd); Dallas-Ft. Worth-Arlington, (45th); Charlotte-Concord-Gastonia, N.C. (47th); Columbus, Ohio, (49th); and third to last and second to last among the 52 biggest metro areas, Houston-The Woodlands-Sugar Land, Texas, and Nashville-Davidson–Murfreesboro-Franklin, Tenn.

This appears to be largely a function of age. All these fast-growing areas are also thosemost attractive to young families  with children. These people are drawn primarily by the good prospects for wage employment — needed to support their families and buy houses — and are less likely to depend on rentier profits. Clipping bond coupons may play a big role in some economies, largely on the East and West Coasts, and notably Florida, but far less in those areas that are growing the old-fashioned way, by working for a paycheck.

Income from Interest, Dividends, and Rent
52 Largest U.S. Metropolitan Areas
Rank	Area	Population 2012	Share of Income from interest, dividends, & rent
	United States (Metropolitan Portion)	267,664,440	18.2%
1	Miami-Fort Lauderdale-West Palm Beach, FL	5,762,717	26.5%
2	Tampa-St. Petersburg-Clearwater, FL	2,842,878	24.6%
3	San Diego-Carlsbad, CA	3,177,063	21.9%
4	Jacksonville, FL	1,377,850	21.5%
5	Virginia Beach-Norfolk-Newport News, VA-NC	1,699,925	21.3%
6	San Francisco-Oakland-Hayward, CA	4,455,560	20.7%
7	San Jose-Sunnyvale-Santa Clara, CA	1,894,388	19.3%
8	Richmond, VA	1,231,980	19.2%
9	San Antonio-New Braunfels, TX	2,234,003	19.0%
10	Las Vegas-Henderson-Paradise, NV	2,000,759	19.0%
11	Los Angeles-Long Beach-Anaheim, CA	13,052,921	18.8%
12	St. Louis, MO-IL	2,795,794	18.6%
13	Sacramento–Roseville–Arden-Arcade, CA	2,196,482	18.6%
14	Washington-Arlington-Alexandria, DC-VA-MD-WV	5,860,342	18.5%
15	Orlando-Kissimmee-Sanford, FL	2,223,674	18.5%
16	Boston-Cambridge-Newton, MA-NH	4,640,802	18.5%
17	Hartford-West Hartford-East Hartford, CT	1,214,400	18.4%
18	Austin-Round Rock, TX	1,834,303	18.4%
19	Seattle-Tacoma-Bellevue, WA	3,552,157	18.2%
20	Rochester, NY	1,082,284	18.1%
21	Denver-Aurora-Lakewood, CO	2,645,209	18.1%
22	Portland-Vancouver-Hillsboro, OR-WA	2,289,800	18.1%
23	New York-Newark-Jersey City, NY-NJ-PA	19,831,858	17.9%
24	Baltimore-Columbia-Towson, MD	2,753,149	17.9%
25	Chicago-Naperville-Elgin, IL-IN-WI	9,522,434	17.4%
26	New Orleans-Metairie, LA	1,227,096	17.4%
27	Milwaukee-Waukesha-West Allis, WI	1,566,981	17.3%
28	Salt Lake City, UT	1,123,712	17.1%
29	Buffalo-Cheektowaga-Niagara Falls, NY	1,134,210	17.0%
30	Minneapolis-St. Paul-Bloomington, MN-WI	3,422,264	16.7%
31	Providence-Warwick, RI-MA	1,601,374	16.7%
32	Oklahoma City, OK	1,296,565	16.6%
33	Kansas City, MO-KS	2,038,724	16.6%
34	Phoenix-Mesa-Scottsdale, AZ	4,329,534	16.4%
35	Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	6,018,800	16.2%
36	Riverside-San Bernardino-Ontario, CA	4,350,096	16.2%
37	Atlanta-Sandy Springs-Roswell, GA	5,457,831	16.2%
38	Birmingham-Hoover, AL	1,136,650	16.2%
39	Grand Rapids-Wyoming, MI	1,005,648	16.0%
40	Cincinnati, OH-KY-IN	2,128,603	15.9%
41	Pittsburgh, PA	2,360,733	15.8%
42	Louisville/Jefferson County, KY-IN	1,251,351	15.7%
43	Raleigh, NC	1,188,564	15.7%
44	Cleveland-Elyria, OH	2,063,535	15.4%
45	Dallas-Fort Worth-Arlington, TX	6,700,991	15.2%
46	Detroit-Warren-Dearborn, MI	4,292,060	14.8%
47	Charlotte-Concord-Gastonia, NC-SC	2,296,569	14.4%
48	Indianapolis-Carmel-Anderson, IN	1,928,982	14.3%
49	Columbus, OH	1,944,002	13.3%
50	Houston-The Woodlands-Sugar Land, TX	6,177,035	13.3%
51	Nashville-Davidson–Murfreesboro–Franklin, TN	1,726,693	12.8%
52	Memphis, TN-MS-AR	1,341,690	12.7%
Source: Bureau of Economic Analysis
Analysis by Mark Schill, Praxis Strategy Group

Income from Interest, Dividends, and Rent
Top & Bottom 25 Among the 100 Largest U.S. Counties
Rank	County	Population 2012	Share of Income from interest, dividends, & rent
1	Palm Beach, FL	1,356,545	39.8%
2	Lee, FL	645,293	39.6%
3	Pinellas, FL	921,319	29.1%
4	Fairfield, CT	933,835	25.4%
5	San Mateo, CA	739,311	24.4%
6	Lake, IL	702,120	23.8%
7	Broward, FL	1,815,137	23.0%
8	St. Louis, MO	1,000,438	22.8%
9	Westchester, NY	961,670	22.5%
10	Pima, AZ	992,394	22.0%
11	Hillsborough, FL	1,277,746	21.9%
12	San Diego, CA	3,177,063	21.9%
13	Nassau, NY	1,349,233	21.7%
14	New York, NY	1,619,090	21.7%
15	Honolulu, HI	976,372	21.4%
16	El Paso, CO	644,964	21.3%
17	Montgomery, MD	1,004,709	20.9%
18	Norfolk, MA	681,845	20.5%
19	Ventura, CA	835,981	20.3%
20	Travis, TX	1,095,584	20.2%
21	Bergen, NJ	918,888	20.2%
22	Middlesex, MA	1,537,215	20.1%
23	Fairfax, Fairfax City + Falls Church, VA	1,155,292	20.0%
24	Orange, CA	3,090,132	19.7%
25	Baltimore, MD	817,455	19.7%
76	Snohomish, WA	733,036	14.8%
77	Mecklenburg, NC	969,031	14.8%
78	Worcester, MA	806,163	14.7%
79	Suffolk, MA	744,426	14.6%
80	Collin, TX	834,642	14.5%
81	San Bernardino, CA	2,081,313	14.5%
82	Gwinnett, GA	842,046	14.4%
83	Marion, IN	918,977	14.2%
84	Jackson, MO	677,377	14.2%
85	Kern, CA	856,158	14.1%
86	Queens, NY	2,272,771	14.0%
87	Tarrant, TX	1,880,153	14.0%
88	Franklin, OH	1,195,537	13.9%
89	Wayne, MI	1,792,365	13.8%
90	Macomb, MI	847,383	13.7%
91	Shelby, TN	940,764	13.6%
92	Harris, TX	4,253,700	13.2%
93	Denton, TX	707,304	13.2%
94	Davidson, TN	648,295	12.8%
95	Kings, NY	2,565,635	12.8%
96	Will, IL	682,518	12.8%
97	Hudson, NJ	652,302	12.7%
98	Philadelphia, PA	1,547,607	12.5%
99	Hidalgo, TX	806,552	11.1%
100	Bronx, NY	1,408,473	11.1%
Source: Bureau of Economic Analysis
Analysis by Mark Schill, Praxis Strategy Group