Real Estate Market Tiers

When our cat Miss Fluffy started exhibiting signs of social anxiety a few years ago, we had no idea that her emotional distress would lead to us forming and developing the premier pet therapy clinic in Palm Springs. But here we are, making a fortune on anti-stress merchandise and housepet counseling services, and now we’re considering expanding Chillpet, Inc. into a new market. But which new market to choose?

Well, one thing we can look at is an area’s real estate market tier.

“Real estate market tiers” are categories of real estate markets, and there are three to choose from: Tier I, Tier II, and Tier III. Not very exciting names, to be sure, but they do tell us a little something about the market they represent.

Tier I markets are very well-developed and tend to have high housing prices and an appealing infrastructure (i.e., there are good schools, there’s a good freeway system, the WiFi signal is strong, etc.). Think New York and Los Angeles. Those are Tier I markets, as are places like Phoenix, Dallas, and Denver. Tier II markets are maybe a little less developed and established, but they’re not exactly third-world countries. Think: Anaheim, Portland, Madison, or Scottsdale. They’re decent-sized cities with real growth potential; they’re just not New York or LA. Tier III markets are smaller and less developed yet, but again, it’s not like these places don’t have roads or running water. They do, however, tend to have lower housing costs, and out of our three tiers, they’re the most likely to be impacted by economic changes, like recessions.

It would probably be cheapest for us to set up our next Chillpet clinic in a Tier III market, but it’s also the most risky. A Tier I market would be the most desirable, but it would also cost us a fortune to get set up, and there’s probably a fair amount of competition. But we’ll have to weigh the pros and cons, do some research, and consult with Miss Fluffy (she’s very zen these days) before we make our final expansion decision.