Report Details the Most Distressed, Most Prosperous Parts of the US

Washington, D.C.—According to the Distressed Communities Index Report released recently by the Economic Innovation Group (a bipartisan think tank aiming to empower entrepreneurs and investors), the United States is largely a divided nation: divided into prosperous areas and distressed areas—generally zip codes are the unit of geographic measurement, but metro areas are also analyzed. No region has a monopoly on either, but Southern states and some older Northern metros tend to have higher concentrations of highly distressed areas.

The division of the country in this way has far-reaching implications for many initiatives, public and private. That includes multifamily development and investment. Naturally, there’s more of a market for apartments in prosperous areas, and a stronger market for higher rents; but that also means those areas are more easily overbuilt. By contrast, distressed areas are riper for affordable development, but even market-rate properties can be good investments under certain circumstances, and such markets tend to see less development and investment competition.

Among other metrics, the organization formulated “distress scores” for zip codes and metros using the number of adult residents without a high school education; the poverty rate; and the number of adults not working, all information collected by the Census Bureau’s American Community Survey. Other factors include the median income ratio—the area’s median income to its state’s median—the change in the number of jobs in the area between 2010 and ’13, and the change in the number of business establishments in the same period.

The report found that Texas is home to the largest population of residents in highly distressed zip codes, but Mississippi has the highest share of its residents in such zip codes. On the other end of the spectrum, California is home to the largest population in prosperous zip codes, but North Dakota has the highest share of its residents in prosperous zip codes.

The South isn’t the only place suffering from concentrations of distress, either. Rust Belt cities also have high levels of distress, and in fact Camden, N.J., is the most distressed city in the country, with (for example) 32 percent of the population not finishing high school, and the city’s median income only 36.4 percent of the state’s. High levels of distress are also found in South Texas and in California’s Central Valley.

The country’s most prosperous cities—the fifth of them with the lowest distress scores—tend to be affluent locales on the fringes of the metro regions in the middle of the country or California. They’re disproportionately concentrated around Dallas, Denver, Houston, L.A., Minneapolis and the SF Bay Area, the report noted.