Evaluating the Economic Health of an Area
This topic has been in the news quite a bit lately, especially here in Seattle where there are so many questions about where this cities’ next steps are. Some are considering finding other places to live, maybe for a slower lifestyle or job changes.
If you are moving to a new area, thinking about investing elsewhere, or even just evaluating your own region, there are a few different metrics to look at to determine its economic health. A healthy economy usually goes hand-in-hand with strong property appreciation, so it pays to do your homework. There are five things to look at when making this evaluation:
Population and Migration – Are more people moving out than in? People will move in because of job opportunities and quality of life. If people are moving out, that is usually because the job opportunities have dried up, are not as lucrative as they thought, there are better opportunities elsewhere, and/or quality of life has diminished. A declining population may be a sign of current trouble brewing in the local economy or trouble ahead.
Infrastructure – Are things like roads and bridges crumbling? How are the sewer, water pipes, and drainage? Does it take a long time for repairs to happen – if at all? A deteriorated infrastructure means two things – local dollars are not there to make these fixes and the Federal Government hasn’t deemed the area worthy of investment. The government will spend money where it sees there are future opportunities, so if it isn’t making that investment, chances are big economic improvements are not slated to come that way.
Reinvestment in Community – When bonds and bills for improvements to schools, roads, crime prevention, and more come up for vote, are they usually approved or voted down time after time? When residents are wary of spending their own dollars (via property taxes and other local taxes) on community improvements, that can be a red flag. But when folks are enthusiastically and strategically voting for issues that they can see will make a difference, that is a good sign for the future economy of the area.
Economically- Diverse Hubs – When there are multiple types of industry in an area, that is a sign of health. When an area is dominated by one type of industry – such as auto manufacturing in Detroit a few decades ago, coal mining in West Virginia, or even tourism in Hawaii, it can be tough for that area when things change for that single industry. In the Puget Sound, for example, although technology is a industry leader with Amazon and Microsoft, education is also a strong driver of the economy as is medical, the port, aerospace, bio research, and even the military and agriculture making it less volatile when one of those industries does not perform as well.
Proactive Government – Is the local government proactive in tackling the challenges in the area? Are the police able to enforce the rules or are they addled with inconsistent processes and lack of resources? Are there bottlenecks in the local government that keep progress from happening predictably? Is the local government process transparent and fair? When a community doesn’t feel like their local government is working for them and there is mistrust and unease, that can affect the local economy as well.
Doing your research before making a move is important for protecting your investment. If you have questions or would like additional information on our local economy, reach out!