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Rediff.com  » Business » The 10 richest cities in the US

The 10 richest cities in the US

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Last updated on: November 07, 2005 16:12 IST

The richest cities in the US are glittering metropolises where super-wealthy people gather and even relatively modest homes costs millions of dollars.

Or so one might think.

Los Angeles, home to a long list of rich neighborhoods (think Beverly Hills, Bel-Air and Holmby Hills), would seem an obvious candidate for any rich list. So would New York, where a penthouse is currently on the market for $70 million, and where property prices are so high it seems at times as though only moguls and celebrities can afford to live there.

Slideshow: Richest cities in the US

But by at least one measure of wealth, neither city makes the list. To figure out the richest places, have a look at the American cities with the highest median household incomes (the level at which half of the households make more and half less), as measured for 2004 by the US Census Bureau. And prepare to be taken aback.

Yes, San Francisco (with a median household income of over $60,000) makes the list, as does Washington, D.C., where half the households make more than about $46,500. But New York, Boston and Miami are nowhere to be seen in the top ten.

California cities make up 40 per cent of the rankings, and the rest is made up by some surprising locales, including Anchorage, Raleigh, N.C., and Virginia Beach, Va. While pleasant places, they aren't generally thought of as homes for the rich and famous.

10 richest cities in the US

Rank

City

State

Median Household Income

Median Home Price

1

San Jose

California

$71,765

$625,000

2

Anchorage

Alaska

$61,595

$294,374

3

San Francisco

California

$60,031

$726,900

4

Virginia Beach

Virginia

$55,781

$192,000

5

San Diego

California

$51,382

$605,600

6

Anaheim

California

$49,622

$696,100

7

Raleigh

North Carolina

$47,878

$185,200

8

Seattle

Washington

$46,650

$310,300

9

Washington

District of Columbia

$46,574

$429,900

10

Honolulu

Hawaii

$46,500

$577,800

What gives? A combination of local economic strength, geographical quirks and the limitations of the analysis, which measures the middle of the income distribution, rather than the extremes.

"Places like Los Angeles and New York have very skewed distributions of income," says Gilbert Yochum, professor of economics at Old Dominion University in Norfolk, Va. "There are lots of rich people, but lots of poor people. Most of the cities in this metropolitan area -- Norfolk, Newport News, Virginia Beach -- have a much less skewed distribution of income. There's not as much poverty, but there aren't as many rich. We have a very high center."

Newer cities also have higher median incomes than more established places, like Boston or Chicago, because they are growing and have people moving in rather than out. Look just outside the city of Philadelphia (which also did not make the top ten), for example, and you will see an abundance of wealthy suburbs.

Most overpriced places in theĀ US

According to Yochum, Virginia Beach is also helped by its strong military economic base. Military areas tend to have less-extreme income distributions (a reason San Diego makes the list as well), and retirees in the area have comfortable military pensions, he says.

In Anchorage, meanwhile, a lack of retirees helps keep median incomes higher, explains Scott Goldsmith, professor of economics at the University of Alaska Anchorage.

"We don't have a very large senior population," he says, because historically people went elsewhere to retire (though that is changing somewhat). "Almost all of our households are in their prime working years. And among the working-age population, labor force participation is quite high."

World's most expensive homes

Anchorage has a lot of two-income households, and wage levels are relatively high, Goldsmith says.

"We have a lot of professional-type jobs in health care and education and the oil industry and engineering," he argues. "That helps to jack up the average."

High tech helps a couple of cities -- notably Raleigh, N.C. and San Jose, Calif. -- make the list. San Jose, in the heart of Silicon Valley, tops the list with a median household income of $71,765. That's not a huge surprise, given that the broader area is home to technology powerhouses, including Intel, Cisco Systems and Google.

Homes of the world's billionaires 2005

"We're talking about a highly educated population, with a lot of technical skills," says Michael Solt, associate dean at the College of Business at San Jose State University. A lot of high-tech manufacturing used to take place in Santa Clara County, he points out. And even as companies, such as Sun Microsystems and Hewlett-Packard, grew, matured and shifted production overseas, they retained California headquarters.

"We're talking professionals and a lot of high-ranking officials in the corporate world, who are compensated pretty highly too," says Solt, who can't resist adding that a balmy, Mediterranean style climate and a diverse culture help draw professionals, such as lawyers and doctors, some of them from Asia.

"A lot of working-class people have come here too. But when you're talking about driving the income, it's those professionals," he says.

Though it may be across the country from San Jose, highly educated workers also drive income levels in Raleigh, says Ken Atkins, executive director of Wake County Economic Development, part of the Raleigh Chamber of Commerce.

"A very short answer is very smart workers," Atkins says. The area has the largest research park in the world, Research Triangle Park, and has become a center for knowledge industries.

Less than a year ago, he points out, Credit Suisse First Boston, part of Credit Suisse Group, decided to place its global-operations center in Research Triangle Park, creating 400 new jobs with an average wage of about $72,000 per year. The city regularly makes list of the best places to do business and has relatively affordable housing and a strong educational system.

"Smart people can live anywhere," Atkins says, "and they choose to live in the best places."Residents of other cities may disagree. Then again, he has numbers on his side.

Sara Clemence, Forbes
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