America's Fastest Growing Millionaire Cities
Facebook, Zynga, LinkedIn and other high flying Bay Area start-ups have launched their founders and investors into the billionaire stratosphere (at least on paper). Over the last year, the social network revolution has made tycoons out of the likes of Sean Parker, Eduardo Saverin, Mark Pincus and Reid Hoffman. Last summer, Facebook’s Mark Zuckerberg was richer than Apple’s Steve Jobs. Today, he’s wealthier than both Google guys, Sergey Brin and Larry Page, too.
But while Silicon Valley basks in the golden glow of the wealth spotlight, Houston, TX is quietly minting new millionaires at a fast pace.
For the last two years Houston has enjoyed more growth in the number of High Net Worth Individuals–people with at least $1 million in investable assets (primary homes don’t count)–than any other U.S. city.
A recent Capgemini study found that Houston’s millionaire population surged by 9.6% to a total of 96,700 wealthy citizens from 2009 to 2010. The year before that, Houston saw its millionaire ranks surge by 29%.
What’s stimulating the increase in Houston’s millionaire roster? Old school fossil fuels. “The strong presence of the oil and gas industry in Houston benefited local HNWIs as oil prices grew over 15% in 2010,” William Sullivan, Capgemini’s head of Global Market Intelligence, wrote in an email. “Additionally, of the 10 markets studied, Houston had the highest per capita income growth (8%) compared to a 4% average growth for the other nine markets.”
The Bay Area has lagged in growth. Out of the top 10 cities with the largest increase in millionaires (new and returning) San Francisco ranked 7th and San Jose finished 10th. Don’t get me wrong, being among the top 10 metro regions for millionaire growth is a good thing. But it’s surprising to see cities like Washington D.C., Boston and Chicago create millionaires at a higher rate than the cradle of innovation that is Silicon Valley. Even economically-challenged cities like Detroit and Philadelphia had higher percent increases of HNWIs than San Jose.
How can this be? My colleague Kerry Dolan brings up a great point: since Silicon Valley already has a large percentage of millionaires, its growth rate could be slower than other cities that are catching up. In fact, based on the Capgemini report, 4% of the San Francisco area’s population are millionaires and in San Jose that number is 6%. Those rates are extremely high. Detroit’s percentage of high net worth individuals is 2.6%, Boston’s is 2.9% and Philadelphia’s is 2.4%. Even now, just 2.1% of Houstonians are millionaires, roughly a third of San Jose’s millionaire concentration.
Another factor: for every Facebook and Zynga that grab headlines and christen new billionaires, there are hundreds of start-ups in the Bay Area that aren’t turning profits. What are your theories for why cities like Detroit had higher millionaire growth rates than Silicon Valley in between 2009 and 2010?
Here are the nation's five fastest growing millionaire cities:
Please note, for this study, millionaires are defined as individuals with $1 million or more in investable assets. Source: Capgemini.