Medium Sized US City Ranking Breakout

Part 1 — Overall rankings for each category and the explanation on how the ranking is happening.

Big City Breakout (>3 million MSA population) and the second breakout I did Very Small Cities (<500k MSA population).

This one will be focused on the the MSA’s with a population between 1.5 million and 3 million. This should be shorter than the very small city list as there’s more familiarity with these places in general and 10 is less than 21.

Rankings

1. Austin TX (tier 1)
2. Denver CO (tier 1) Tied-1st
3. San Jose CA (tier 2)
4. Portland OR (tier 3)
5. Nashville TN (tier 3)
6. Charlotte NC (tier 3)
7. Columbus OH (tier 3.5)
8. Pittsburgh PA (tier 3.5)
9. Sacramento CA (tier 4)
10. Virginia Beach VA (tier 5)

Tier 1

#1. Austin Texas

Coming in tied for first with Denver, Austin has seen significant growth both in terms of the population/economy as well as in its status in the current zeitgeist.

Austin has seen a significant boom in the last decade due to expansion of many tech regional offices with Amazon, AMD, Apple, Cisco, Dropbox, eBay, Google, IBM, Facebook, Intel, Oracle, paypal, and basically every other tech company expanding the presence in the MSA. This is going to be a theme in the medium city list as SF, San Jose, Seattle, and to much lesser levels of significance NY/LA, have seen saturation of the high-end talent market in the cities tech traditionally has called home, and while pulling people into the market continues there are a significant share of the total available talent market that just isn’t interested in moving. From a talent acquisition perspective, especially software engineering roles, it has been necessary to diversify into these other markets both to tap into the local market as well as give more options for folks located outside of markets to relocate to.

It isn’t just regional office expansion as most notably Dell, Indeed, NXP semiconductor, and Whole Foods have HQ’s in the MSA (NXP and Indeed are actually a co-HQ with the other HQ’s in the Netherlands and Connecticut respectively). Government is also important with Austin being the state capital, there is a significant presence of federal government employment, and University of Texas being in the city (50k students and >15k employees).

I was somewhat surprised by the relative level of affordability, I know home prices have been increasing as the city has been growing so I expected it to be pretty expensive, however relative to the $70k median household income the median home price for the MSA of $320k is actually not bad (It fluctuates a bit with most of the months the last 2 years varying between $310k — $400k). I need to add this somewhere so Healthcare is excellent and schools are good, obviously there’s a lot of heterogeneity across the MSA but these statements on the quality of those services and the variance is going to mostly be true about any sufficiently large city.

Austin has a large hospitality service sector driven by it’s self proclaimed title of live music capital of the world, being a large destination for all sorts of performing arts such as comedy, theater, film, obviously-music, and one of the more notable festival/conference things in SXSW.

Austin sits at the intersection of a few ecological/climate regions most notably Texas hill country to the southwest, the humid subtropical region coming off the gulf coast and the arid/semi-arid climate of the non-mountainous parts of west Texas. June-Sep average highs are at or above 90 degrees with the hottest month of the year August having 97 highs and 75 degree lows. The coldest month of the year is January with Average highs of 62 and average lows of 42. Even though it only has <90 days of precipitation a year it averages just a little bit less rain than Seattle, with Austin coming in at 35 inches of rain a year. It also is less sunny than the rest of the SW coming in at 2600 hours of sunlight per year with the non-summer months being 50% overcast.

The Colorado river runs through the center of the city and the river has a number of lakes (Lady bird, Lake Travis, Town Lake) and Lake Walter E. long.

While the inner urban core is super walkable, bikeable and has effective transit, the MSA as a whole scores very poor. The larger MSA is very heavily car-dependent and that contributes to worse traffic than basically all medium sized cities (1 very notable South SF Bay city outlier).

#2. Denver Colorado

Much like Austin, Denver has experienced very strong growth over the last 10 years with population and payroll/labor-force growth of >30%. A lot of the higher skilled or maybe more appropriately the knowledge economy has more rapidly developed in Austin and that gets reflected in the slightly higher wages and faster growth trajectory, while Denver has a lot more of the economy focused on physical things whether that’s natural resource, energy, or physical location based wholesale, distribution, telecom/one-bounce satellite global connectivity.

Denver has strong healthcare and pretty solid educational services with top 5% nationally ranked school districts in a number of the suburbs and a few of highly ranked schools in the city itself. Most of these medium cities are in the same tier of educational access having a number of high quality public school options. The big outliers are on the top end, our next city, San Jose has as many top 1% of national ranking schools/districts as the rest of these cities have top 5%/10% nationally ranked. On the downside Virginia Beach sticks out in a 4th tier all itself, with lower ranked schools and very few high quality options, and in tier 3 Austin, Nashville, and Sacramento being solid but not quite up to the level of the rest of the list.

Denver is an outdoor enthusiasts paradise having options for everyone year round. Being on the Front Range of the Rocky mountains there are obvious winter and summer options, and the weather is quite good year round. 3100 hours of annual sunshine with 70% of sunlight hours being sunny — which results in 7–10 hours of sunshine per day through out the year. Average highs in the hottest month of the year are 89, with 45% humidity this is much more mild than the same 89 in the southeast or midwest. The coldest month of the year has 43 degree highs and 20 degree lows. Being on the east side of the mountains there is a precipitation shadow which keeps rain (14 in) and snow levels (54 in) relatively low — obviously as you get into the mountains heading west this changes pretty quickly. All these things feed into Denver being one of the most active and fit cities and that has positive impacts on all sort of quality of life, satisfaction, and happiness metrics.

Tier 2

#3. San Jose California

This metropolitan area pretty much corresponds to Santa Clara county. This is Silicon Valley, though the term has morphed in the general/public lexicon to include San Mateo County definitely — which technically isn’t part of the San Jose MSA but is part of the SF-Oakland MSA even though outside of San Bruno it’s much more connected to santa clara county and closer to SJ — and maybe even includes the whole SF-Bay area in some people’s mind.

This is the highest income MSA in the US and has the highest GDP per capita in the world (you will find places like Zurich city and Oslo city proper or Qatar listed at or above depending on point in time and PPP adjustment but functionally the story is not changed this is the highest productivity and income place in the world).

Like I mentioned in the tangent on education in the Denver section, San Jose MSA has far-and-away the best schooling in this list and really of any city on any of these lists. Being able to afford to live in the areas where these schools are is a different story.

Housing is very expensive, even after adjusting for the very high income we still end up with median Home to median HH income of 10x. That’s a very poor affordability ratio in the US, even if it’s not all that bad for a major global Alpha city. Rent is a bit better as housing prices are more than 2.5x the national average while median rents are not quite double. However, that still leaves median gross household income at 2.7x median 2 bedroom rent, so a 3–1 gross income ratio requirement on renting would price out median income earning households from median 2 bedroom apartments. The housing and rental supply limitations aren’t just an affordability problem, as it also has hampered population and labor force growth. San Jose is one of the biggest discrepancies we see in terms of very different GDP/Wage growth and Labor Force / Population growth, whereas most places are like our first two cities where all those things directionally move the same.

The natural environment near by is really good, with everything between San Jose and the ocean being beautiful forest, redwoods, and smaller coastal mountain range. The pacific coast from SF down to Big Sur is all nearby and accessible, in the opposite direction you are really not all that far from the Sierra Nevada’s being 3–4 hours from for example Yosemite (you know ignore the whole possibilities of traffic making that longer). Also the entire surrounding SF bay area is full of recreational outdoors stuff. The weather is also pretty mild year round with 82H-58L for July and August and 58H-42L for Dec-Jan, plus it’s sunny with only about 60 days of rain a year mostly coming Nov-Apr.

Tier 3

#4. Portland-Vancouver OR-WA

Portland is an interesting one as it has a lot of stuff that puts it pretty solidly in tier 2 or 3 for services, access to stuff , it’s on the smaller side of these cities and that makes certain stuff, all else equal, better. Then a few things on either end of the distribution with nature and access to outdoor recreation really excellent, and affordability on the down side.

While it’s no where near the most expensive city after adjusting for incomes it ends up being one of the more expensive metros. As an example let’s use the other major US Cascadia city Seattle. Seattle has median home prices nearly 50% higher than Portland, but median household income is 50% higher as well. Both places sit at Median Home Price to median household income ratios of 6x-7x which is not San Jose, SF, or LA but is still pretty tough, however when we think about these types of urban areas they have very different Homeownership rates (50%) than primarily suburban/rural areas so we need to account for the rent-ratios more heavily in the affordability understanding.

Looking at Seattle the median household income to median rent we see a 5.2x gross income to rent ratio, compared to 4.1x for Portland. Another reference point that I want to note because I find it interesting is that Indianapolis which is widely considered to be just about the most affordable metro in the US — due to its ridiculously affordable homeownership 2.5x median price to income ratio — has a median gross monthly income to median rent ratio of 4.6x. So we can see that while Portland isn’t exactly the Bay Area in terms of lack of affordability it’s still a more serious problem than most of the high ranking metros in the Big or Medium city list and the labor market opportunities don’t stack up to those other cities.

Portland also suffers from much higher poverty rates than many of our expensive cities. Most of these expensive cities see substantial price inflation for two reasons — the importance of each factor differs by city but they largely both are at play — the first is the demand side where high wages, high wage growth, and a high level of desirability to live in the city because of geographic reasons and labor market opportunity reasons push up the cost of housing. The second piece is the housing supply, many of these cities have limitations in housing stock whether it’s because of geographic/topographic limitations to adding new housing stock or because of artificial restrictions on density or sprawl. Mostly this means that places that are expensive are going to be places where opportunity is high and you will see lower poverty rates, for example The Bay Area and Seattle have poverty rates below 10% while affordable midwestern cities (think cities in OH, IL, IN, WI, MN, IA, MI) have poverty rates around 20% and above. Meanwhile Portland comes in at 15% (though I’m sure with 2020’s happenings that is much higher now). It’s expensive and there are a lot of people on the low end of the income distribution, and that makes for a really shitty equilibrium in terms of Quality of Life for a very large number of people.

Portland similar to Austin, but to a substantially lesser degree, has regional offices for a number of tech companies. It also has some very large employers most notably Nike and Intel in the Hilsboro-Beaverton area. This all goes along with a pretty standard urban service oriented economy.

The really strong positive I mentioned before, nature, is similar to the stuff I wrote about Seattle, Bend, Eugene, Wenatchee, Bellingham and Medford. The cascades are incredible and no matter where you head to the NE, East, and SE you will run into forests and stunning mountains. Mt. Hood being the most significant nearby Peak. There’s also the Columbia river gorge which is very beautiful. The northwest offers fairly mild, though gloomy, winters at the lower elevations , which makes year round outdoor activity easy. The mountains also offer all the winter sports activities your heart could desire.

#5. Nashville

If you like former-sorority members coming from all over the midwest and southeast to get drunk, be loud, and pretend they are a princess for a weekend for their bachelorette party, you have come to the right city.

Amazon picking Nashville as a location to expand with ~10k tech jobs is not a surprise to anyone that has been paying attention to the growth in regional offices in Nashville. There’s a few things that I think play into this, most important is access to high end talent. Nashville is home to a number of universities most prominently Vanderbilt, Belmont, Lipscomb, and I guess MTSU and TSU.

Nashville is also one of the only cosmopolitan-urban areas that draw students from the private and flagship-public universities. For example University of Tennessee and University of Kentucky. Some people might stay in Lexington/Knoxville after graduation as they have opportunities, a solid quality of life and people often become comfortable in the places they go to college and it’s pleasant to stay somewhere comfortable/familiar. However the majority of graduates are going to either return home or go to major cities this inevitably leads to a large number of people heading for Nashville post-graduation. Much as Chicago has always benefitted from being a places that pulls in talent from all the BIG-10 schools, Nashville is doing the same thing as a regional urban area pulling in the talent from surrounding colleges.

Nashville is affordable, with median home price to median income below 4x, median rent is pretty affordable at 4.6x median income.

The weather is not terribly different from most of the SE — fairly hot and humid in the summer, winters are very mild though overcast, and about 6 months of the year (spring/fall) in that sweet spot temperature wise. It’s pretty rainy getting almost 50 inches of rain a year and fairly overcast with 2500 hours of sunshine (40%-60% possible sunshine year round).

There’s lakes and rivers throughout the metro area, offering recreation options, and Nashville sits within a basin that is surrounded by the highland rim so you end up with the city being surrounded by hilly almost ridge like topographic features. Theres also a lot of touristy music, bar, sports type stuff to do. Within a day trip to the west is land between the lakes and the whole Kentucky lake area. To the east within day trip range you have the Appalachians. Knoxville offers a much better outdoor recreation suite of activities but Nashville certainly isn’t Kansas.

#6. Charlotte

Most notably this is home to rookie NBA sensation Lamelo Ball’s team the Charlotte Hornets.

Charlotte sits on the piedmont plateau, the region that sits between the Appalachians and the Atlantic coastal plain and runs north-to-south from PA/NJ-GA/AL. The weather story is similar to what we saw with Nashville, the only difference being that Charlotte is less rainy (40 vs. 50 inches of precipitation) and sunnier (2800 vs. 2500 hours of sunshine). While North Carolina is a coastal state Charlotte isn’t very close to the ocean, to take advantage of the ocean recreation activities requires over night stays as Wilmington/Myrtle Beach are 3–4 hours east. Much closer and accessible is heading towards the mountains to the west, while not exactly Asheville in terms of access, much of the beauty of the Appalachians is just a bit more than an hour away. There are lakes and rivers along the edges of the metro area, however there does not seem to be much if any nature activities within the city itself.

Charlotte has $60k median income and a lower cost of living than any of the cities we’ve looked at in this group so far, making it quite affordable. The city has seen strong growth in the population and economy. It is a massive hub for financial services and banking, and overall has a lot of employment opportunities with 7 fortune 500 companies HQ’d in Charlotte and most all financial services companies having operations in Charlotte.

In terms of getting around — the average commute time isn’t terribly out of line with the medium cities landing at 25–30 minutes — however it’s extremely car dependent. Of the 50 biggest cities in the US Charlotte score in the bottom 5 in all of walk score, transit score, and bike score. There are only 4 neighborhoods that score above the national median in all three of those scores, with total population of those neighborhoods being less than 10k, that is impressively bad. The top two neighborhoods only score in the 80th percentile for neighborhoods on walk/transit in the 50 biggest cities — these 2 neighborhoods have less than 4k people total. It’s not hyperbole to say Charlotte is the worst city in the US for non-car movement of people.

Tier 3.5

#7. Columbus

The most notable thing is the level of affordability of Columbus. Median home to median income ratios are under 3 and median monthly income to median rent ratios are 5:1. As far as I can tell on an income, opportunity, cost of living adjusted basis Columbus is maybe the optimal place. Average mortgage payment including taxes and PMI are $1,300, and median rent is $950, all of this with a pretty healthy labor market with wages 5% above national average.

The economy is quite diversified with significant levels of employment in finance, retail, food and beverage, healthcare services, higher education, public sector (state capital), manufacturing, insurance, fashion and energy.

Columbus is just about the grayest city in the US outside of the pacific northwest, the average sunshine hours are within 1% of Seattle at a bit under 2200 hours of sunshine. The distribution of sunshine is quite different though with PNW winters having 40% less sunshine and the summers having 20% higher. Temperatures range from between highs of 37 in January and 84 in July.

There are forests and lakes in every direction, and the metro area itself has quite a bit of green space. To the east and southeast well within a reasonable day trip distance there is access to the hills, bluffs, and ridges that push up into the Appalachians.

#8. Pittsburgh

Pittsburgh is even cheaper than Columbus — having 20% lower housing costs and similar rental costs — this is offset by median incomes that are almost 10% lower. Given the roughly 50% home ownership rates 0.5*Housing cost delta (20%) + 0.5 the rental cost delta (0%) and factor in the 10% difference in incomes, we end up with Columbus and Pittsburgh being nearly identical in terms of housing affordability.

Pittsburgh has similar weather to Columbus, though maybe a bit worse, average highs ranging from 35 in the coldest month and 82 in the warmest, and 2000 hours of sunshine (even less than Seattle and a full 15% less sunshine through out the year than Portland). Air and Water quality are not ideal, routinely exceeding EPA thresholds, with the American Lung Association ranking the metro in the bottom 10 the last decade out of 300 metro areas. The steel, coke, aluminum, and other material/manufacturing production in the broader metro area drives elevated levels of particulate pollution. The waterways are also quite polluted largely do to runoff and sewage overflows impacting the major rivers.

Pittsburgh is known as the Steel City associated with the historical importance of the city to the global steel industry, while there are no steel production facilities in the city limits there are still plenty in the MSA. There are 8 fortune 500 companies HQ’d in Pittsburgh, Kraft-Heinz, PNC Financial, PPG, US Steel, Alcoa, Arconic, WESCO, and Dick’s. The economy of the city isn’t just based on these major companies as there is a substantial web of employment in materials production, financial, retail oriented companies, as well as the nearby shale oil/gas. There’s also substantial Higher Education and Healthcare employment with 11 PhD granting universities and the University of Pittsburgh Medical System — The metro is home to 44 private-public college/universities with >1000 students, University of Pittsburgh, Carnegie Melon, Duquesne, Robert Morris and the confusingly named (after the towns) Indiana and California Universities of PA being the most significant.

The presence of CMU, materials, and concerted effort from the public sector have driven a significant modernization / industrial-transition, with Pittsburgh being an increasingly prominent center of Tech and an international Robotics hub. Nearly all major tech companies have presence in Pittsburgh.

Pittsburgh-MSA has nearly the best intergenerational income mobility of any metro area in the US (Raj Chetty, et al… in a 2014 QJE article found Pittsburgh as the #2 city in income mobility / opportunity), likely significantly bolstered by the low cost of living, high quality access to educational services, and the breadth of high quality high paying opportunities.

I’ll finish up by mentioning the high quality arts & entertainment options in the cities — there’s Professional and Collegiate sports though maybe pull back on the “high” part of the quality there — as well as all the high society fancy people stuff (orchestra, theatre, museum, opera, etc..). The gilded age saw Pittsburgh as one of the most important technological centers in the world, the Pittsburgh-Cleveland corridor was the Silicon Valley of the last few decades of the 19th Century. This technological advancement, high concentration of power in the advancing fields, and the massive wealth accruals of the famous names (Carnegie, Melon, Rockefeller, Morgan, etc..) resulted in large investment in the arts for/by all those fancy billionaires.

Tier 4

#9. Sacramento

Sacramento found itself in the 3rd–4th tier in every category, solid everywhere but didn’t really stick out anywhere on either end of the distribution. It has experienced modest growth, has pretty good economic metrics, has solid access to education, healthcare and government services, is close to some pretty amazing wilderness in the Sierra Nevada’s, and has actually pretty okay weather.

It’s the capital city of California and with that being the case has a massive public sector presence. Sacramento sits towards the northern end of the central valley of California and has a number of agricultural related corporations and distribution industries. UC Davis and Sacramento State are in the metro, which combined have 50k-60k students and >20k employees.

Sacramento has a lot of access to nature within 1–2 hours. To the west you can be in Napa in 1-hour and the coastal North of SF Mountains/Redwoods in <2 hours. To the east you can be in the sierra nevada’s in well under an hour and Lake Tahoe in 2-hours. Sacramento gets a ton of sun with 10 months of the year >200 hrs of sunshine, 7 months >300, and 4 months >400 hours. Dec-Jan are the coldest months with 54 degree highs and 38 degree lows, these months see 40% of the annual precipitation and have many days of dense fog bringing more moisture and less sunshine. The summers are hot and dry, but much more manageable than the southern central valley, the average highs in the hottest month July are 92 and it can get excessively hot some times with an average of 14 -100 degree days a year and 70 - 90 degree days.

Tier 5

#10. Virginia Beach (Hampton Roads)

Virginia Beach is in the very southern part of Virginia, and as the name suggests is a coastal city. The cities economy is very heavily dependent on Defense with a number of DoD facilities/bases. It has to be the most heavily over-indexed MSA-economy towards military, having over 70 DoD facilities and 100k active duty military personnel. The other extremely important economic industry is tourism.

Virginia beach proper is the biggest city in Virginia, and all 3 of the biggest population cities in VA are part of this metro (along with Virginia Beach there is Norfolk and Chesapeake), though Northern Virginia (Arlington-Alexandria-Fairfax) are no doubt more “city-like” and economically important.

Virginia beach is pretty affordable having very healthy median household income of $77k and median home prices only about 4x that (that’s much higher than I would have guessed for household income). There are non-government employment opportunities with a handful of fortune 500 companies HQ’d in the MSA (Ship building, freight, agriculture, and retail). Virginia beach is one of those cities that anytime I’m looking at global GDP numbers I’m always taken aback for a second, it’s a testament to the massive Defense expenditures but Virginia beach MSA has a similar GDP to Manchester, Dublin, Stockholm, Cairo, Oslo, Helsinki, Lisbon, Athens, St. Petersburg.

The weather is fairly mild in the winter, with average highs between 48–52 for the 3 winter months and hardly ever receiving snow, and warm and humid in the summer (87 with >70% humidity). Sunshine is pretty consistent with ~60% sunshine year round and ~10 rainy days a month.

Alright FUHHHH!!! That only took me like 3 months so at this current pace I will finish the small cities rankings list in 2023. I would need to understand how people people rated cities but my guess is the bottom 3–4 cities on our list are either vey under rated or not thought about at all by people.