Millennials are flocking to the Twin Cities, but not because rents are cheap.
The population of young adults in Hennepin County rose nearly 25 percent during the past seven years, one of the biggest gains in the nation, according to RealtyTrac, a national real estate research firm.
That’s despite a nearly 40 percent increase in rent in the Twin Cities area during the same period.
“This is good news for the region,” state demographer Susan Brower said Monday. “To the extent that we can be an attractive place for young people to settle, this will really help bolster the population and economic growth.”
The Twin Cities have an abundance of well-regarded colleges and universities, but it’s broadly believed that economics are driving the trend. The region has one of the lowest unemployment rates in the nation and a modest cost of living compared with many cities on the coasts.
Because of a combination of relatively inexpensive house prices, high wages and low property taxes, the Twin Cities were recently singled out by the Atlantic magazine as the second-most-affordable place in the nation for millennials.
With thousands of new apartments to choose from in both the Uptown area and an increasingly vibrant downtown, Minneapolis has far more housing options than it did a decade ago.
Those apartments also tend to be far more expensive than they were a few years ago.
It’s a generation that doesn’t seem to mind paying a premium to live close to the action.
RealtyTrac defined millennials as those born between 1977 and 1992, but others tend to more broadly define the group as anyone born in the 1980s and 1990s.
These twenty- and thirtysomethings are drawn to the bright lights of the big city.
Statewide, the millennial growth rate during the past seven years topped out at only about 4 percent, said Brower.
“A lot of people say these millennials have a strong preference for living in urban areas,” she said.
The trend could transform the regions. With many millennials moving from outside the metro area, they are likely to change the racial and cultural complexion of the city.
Craig Helmstetter, senior research manager for Wilder/Minnesota Compass, said that because people in this age group are making big life decisions, including marriage and homeownership, much later than baby boomers did, it will be particularly important for employers and policymakers to pay close attention.
“Right now there’s a big generation of baby boomers who are entering retirement, and we’re going to need folks to replace them,” he said.
“It’s called the echo boom for a reason. This is the echo of a mighty big generation.”
Nationwide, cities with the biggest increase in millennial populations were Washington, D.C., San Francisco and Denver, each of which saw an increase of more than 50 percent in this age group.
The RealtyTrac analysis included 2015 fair market rental data recently released by the U.S. Department for Housing and Urban Development for three-bedroom properties in 543 counties nationwide with a population of at least 100,000.
In the 25 counties, including Hennepin, with the biggest increase in millennial population between 2007 and 2013, fair market rents for a three-bedroom property in 2015 will require 30 percent of the median household income on average.
Buying a median-priced home in the county requires 36 percent of median household income on average.
“First-time buyers and potential boomerang home buyers are stuck between a rock and a hard place in today’s housing market,” said Daren Blomquist, vice president at RealtyTrac.
“Many of the markets with the jobs and amenities they want have hard-to-afford rents and even harder-to-afford home prices,” Blomquist said, “while the more affordable markets have fewer well-paying jobs and tend to be off the beaten path.”