An unofficial primer to real estate market terminology.
You’ve probably heard terms like “major metro,” “primary metro area,” “secondary market,” and “tertiary market” when reading market analyses. This nomenclature is “slippery” and often relies heavily on context and speaker intent to make sense of it and apply the commentary to your specific investment goals and strategies. Here, we break down the nomenclature using a series of examples of each type of market to give you a starting point in the classification conversation.
The U.S. Census Bureau (so you can take this one as “official”) defines a metropolitan statistical area (MSA) as “one or more counties that contain a city of 50,000 or more inhabitants or contain a Census Bureau-defined urbanized area (UA) and have a total population of at least 100,000 (75,000 in New England). Counties containing the principal concentration of population – the largest city and surrounding densely settled area – are components of the MSA.”
Why does this matter? You may hear some analysts refer to rural areas as tertiary or even secondary markets. In context, it may make sense, but the Census Bureau does not include them in any “metro” classification in the sense that we are explaining the terminology here.
The Three Progressions of Real Estate Market Classification
Primary Market: Any metro with a population of 2.5 million or more. There are 20 of these markets in the United States.
Secondary Market: Any metro with a population of 1 million to 2.5 million. There are 31 of these markets in the United States.
Tertiary Market: Any metro with a population of less than 1 million. There are 61 of these markets in the United States.