The Twin Cities of Minneapolis and St. Paul are separated by the Mississippi River and together, form a booming metropolitan area. This area is famed for it's pro-sports teams, medical institutions, and plenty of nearby rivers and lakes to explore. It is especially known for its folk, funk, and alternative rock and has launched the careers of many well-known artists, including Bob Dylan, Prince, and more recently, Lizzo.
In order to give you a clear picture of what to expect from the real estate market in the Twin Cities, we picked up three major trends for you. While many major cities have experienced a surge in vacancies amid the pandemic, rental vacancies have actually fallen in the Minneapolis area. Rental rates have increased in the past year as well, rising from an average of $1,522-$1,538 in the last year, with the median home price of just $303,000, property values in Minneapolis fell just below the national average of $330,000. Minneapolis home prices have shot up 11.4 percent on a year-over-year basis. Where foreclosures are concerned, Minneapolis is also operating at a much lower rate than the rest of the nation. While the national average sits at 0.3 percent, Minneapolis is at a rate of just 0.1 percent. While delinquencies have been up over the past year, likely due to the Governor's eviction moratorium, it's important to point out that Minneapolis' high of 5.4 percent was nowhere near the national average of 7.7 percent.
The top three anchor institutions in the city are essential businesses. The Mayo Clinic is the Twin Cities' largest employer, located in the downtown East section of Minneapolis, as well as many of the cities' surrounding areas. The healthcare system employs almost 45,000 people. The second biggest employer in the area is Minnesota State Government. Though the Minnesota State Capitol building is located just outside of St. Paul, the state offices are located in the city central neighborhood, right by Powderhorn Park. In total, the state employs around 40,000 people. The federal government is the third largest employer in the Twin Cities. Its buildings are located just outside of Minneapolis and nearby Bloomington, Minnesota. Over 35,000 employees hold jobs in those offices.
Investors who are looking to specialize in student housing will find plenty of opportunities around the University of Minnesota, Twin Cities campus. That said, Minneapolis differs from other major cities in that the other two major learning institutions in the area are geared towards online students. Located in the city's gateway district and bordered by the Mississippi River, Walden University currently enrolls about 50,000 students. However, investors should be aware that this is an online for-profit university, which means that while it's headquartered in Minneapolis, some students likely don't live near the campus. The University of Minnesota's Twin Cities' campus is a public led grant research school. It's situated in the heart of the Dinkytown section of the city and has an additional campus and neighboring Saint Paul. Together, those two campuses hold around 51,000 graduate and undergrad students. Capella University is located in central Minneapolis. The school enrolls nearly 38,000 students, though notably, it is an online university.
Minneapolis is home to many diverse neighborhoods, which means the question of where it's been invest depends on the type of property you're hoping to buy. With that in mind, we've laid up three neighborhoods that will appeal to different kinds of investors. The central neighborhood is a natural fit for investing. It covers the city's downtown region, which makes it a good fit for short-term investors. However, Mayo Clinic and the State of Minnesota offices are located there, which makes it a decent place for buy-and-hold investors to look as well, though property values are a bit higher in this neighborhood, they are likely to get decent returns. Not too long ago, the North Loop was an industrial area, formerly known as the city's warehouse district, this neighborhood has recently undergone a massive transformation. Construction is everywhere and property values are rising steadily. However, if you look hard enough, it is likely still possible to find a good deal. Part of Ventura Village, the Midtown Philips neighborhood is a good fit for newer investors. The median income here is lower, which means property values will also be on the more affordable end of things. That said, what makes this area unique is that it as popular among millennials who are starting families and are in need of new housing arrangements.
When you look at everything all together, Minneapolis has a lot going forward. The city has a stronger economy, as a foundation for its real estate market. While it's always important to do your research before making any investments, Minneapolis might be a city worth putting on your watch list.