Knowing what market you want to be in helps formulate your investment strategy and being able to choose that market requires an extensive amount of background research and market knowledge. One way to simplify this process is to break down your markets into three classifications and focus on the one that helps execute your investment goals.
Each of these markets differ in population size and density, amenities, infrastructure, job growth and future trajectory.
Primary markets are considered the largest housing markets in Canada. These are large urban areas with high population, robust density, extensive infrastructure, established job markets, and the real estate tends to be sought after by institutional investors. Toronto would certainly be considered a primary market.
Secondary market refers to cities that are slightly smaller than primary markets yet experience rapidly growing population and job markets. Secondary markets tend to experience large increases in rent prices with home prices that are still relatively affordable. The population is still relatively large, but smaller than that of a primary market.
Tertiary markets, sometimes known as emerging markets, generally have the smallest population size. Living costs are typically less than primary and secondary markets including home prices and rent. While they have less infrastructure and amenities, tertiary markets usually see a slow and steady growth of migration and employment. These markets could potential be positioned for long term future growth strategy.
Each market has pros and cons to real estate investing depending on your short- and long-term investing strategy. Knowing which type of market to focus on will allow you to get very clear about which opportunities to pursue and which to pass on.