Here’s why buying a home is a better deal than renting in Las Vegas
The slowdown in housing appreciation means it takes a little longer these days for buying to begin paying off, according to a report Wednesday.
Home-sales website Zillow set the Las Vegas Valley’s “break-even horizon” at 1.5 years in the fourth quarter, up from 1.2 years in the same period a year earlier.
Zillow’s analysis compares renting versus buying, and factors in down payments, closings costs, monthly payments, insurance, taxes, utilities, maintenance and renovation costs. It also calculates home-equity growth for buyers, and for renters, income earned if they invested the same amount of money in an interest-bearing account.
Add it all up, and Zillow’s findings say buying is a better deal than renting if you plan to stay in your home for more than 1.5 years.
The nationwide average was 1.9 years, down slightly from 2 years in the fourth quarter of 2013. The average was less than two years in 66 percent of U.S. metro areas, Zillow said. Among the 35 biggest U.S. cities, Dallas had the quickest break-even point, at 1.2 years. Los Angeles posted the slowest, at more than five years.
Despite the relatively quick payback, renters aren’t buying, Zillow’s report said.
A Zillow survey found that 82 percent of renters nationwide are long-term tenants, and just 14 percent said they aren’t staying in the same place long enough to buy. More than half — 53 percent — said financial limitations keep them from buying.
“If the buy-versus-rent decision were about simple math, we’d likely have millions more homebuyers in the market, because the equation is tilted heavily in favor of buying,” said Stan Humphries, Zillow’s chief economist. “But no matter what the numbers say, buying a home is a huge commitment. Every day, Americans make decisions to buy or rent based on any number of personal dynamics, including preference, flexibility needs, family factors and, yes, financial considerations. There is no right or wrong choice, and it’s important that America’s housing market maintains a number of affordable options for renters and buyers, no matter their preferences.”
Contact Jennifer Robison at jrobison@reviewjournal.com. Find @J_Robison1 on Twitter.