Along with the 3 Ls, should we be talking about the 3 Is?

When talking about the value of real estate, It’s often said the 3 Ls are the largest factors determining value. The 3 Ls are location, location, location. This emphasizes the huge role location plays in the value of any piece of real estate. Being near a major city, on a lake, or close to popular amenities can be location characteristics that have an upward impact on price.

Along with looking at the 3 Ls, should we be talking about the 3 Is? Income, income, income. As prices and interest rates have gone up, larger incomes are needed to purchase homes. A market’s ability to provide affordable options to consumers will have an impact on pricing and potential appreciation going forward. If homes become unaffordable, there will be fewer and fewer buyers.

A market’s job prospects also impact pricing. We have seen shifts in job availability create shifts in pricing. Jobs and workers leaving an area can bring down pricing while more jobs can bring up pricing along with increased development. Recently we have seen the rise of remote work causing people to move and bring up pricing in the places they are moving to.

Where the jobs are and how much income can be earned greatly affect the market. Those factors are important to consider when making determinations about the value of real estate.