Different metro areas can affect households' abilities to amass wealth in different ways, according to a new Bankrate.com report.
The report ranked 21 large metro areas in five categories: Savable income, human capital, debt burden, homeownership and access to financial services.
"In some metro areas, like San Francisco, homeownership can be prohibitively expensive, but higher-than-average salaries can help residents stash more money away in tax-advantaged retirement accounts," Bankrate.com analyst Claes Bell said in a statement. "On the other hand, Minneapolis-area residents don't earn as much, but the area's affordable housing and recovering real estate market provide opportunities to build wealth over the long term through home equity."
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A number of factors influence how quickly and effectively a household can build its wealth, according to Bankrate, and many hinge on geography. According to Diana Elliott, a senior research associate at the Urban Institute, "a home is where most Americans hold their wealth, so it's incredibly important for wealth-building."
However, some of the cities Bankrate studied have homeownership rates south of 60%, often because scarce land and other issues have driven real estate prices so high they're unaffordable for large swaths of the population.
The report finds that a home isn't the only way to build wealth, though. For example, San Francisco's homeownership rate is only 53%, which means nearly half the city's residents don't have access to building wealth through home equity. They're still able to build wealth because their incomes are so much higher, on average, compared with people in other cities that they may have more left over each month to put into savings and investment.
"Some metropolitan areas have seen different rates of growth than others. A lot of that depends on the industries and what's there to support the workers within that city," Elliott said in a statement.
Here are the 10 best metro area for building wealth, according to Bankrate's analysis.
10. Baltimore
Savable income: $9,303
Homeownership rate: 66.9%
Debt burden: $27,917
9. Phoenix
Savable income: $14,828
Homeownership rate: 63.2%
Debt burden: $27,811
8. Denver
Savable income: $13,099
Homeownership rate: 61.1%
Debt burden: $28,007
7. Boston
Savable income: $5,115
Homeownership rate: 55.1%
Debt burden: $26,318
6. Seattle
Savable income: $10,381
Homeownership rate: 55.4%
Debt burden: $27,691
5. Detroit
Savable income: $12,513
Homeownership rate: 71%
Debt burden: $23,610
4. St. Louis
Savable income: $10,451
Homeownership rate: 66.2%
Debt burden: $27,486
3. Washington, D.C.
Savable income: $15,246
Homeownership rate: 64.2%
Debt burden: $28,914
2. Minneapolis
Savable income: $6,557
Homeownership rate: 68.6%
Debt burden: $26,877
1. San Francisco
Savable income: $16,657
Homeownership rate: 53%
Debt burden: $25,941
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Emily Zulz
Emily joined the ThinkAdvisor team as a reporter in the summer of 2014. She previously worked as a reporter for The Daily Journal in Kankakee, Illinois for a year and as a reporter and editor for The Daily Eastern News in Charleston, Illinois for two and a half years. Prior to joining ThinkAdvisor, Emily worked on Groupon’s editorial team in Chicago as a fact checker for three years. She graduated cum laude with a BA in journalism from Eastern Illinois University, and she has been the recipient of two journalism awards for her news reporting at daily newspapers.
