Which is smarter: Buying or renting a home in the Las Vegas Valley?
10 October 2012
The two houses on Tilden Way look almost identical. They share similar colors, layouts and landscaping.
But there's one big difference between them. One is rented, the other is owned.
They shed light on an important question: Is it cheaper to buy or rent a house?
The answer? Buy — though given valley residents’ widespread credit problems, even the cheapest houses are out of reach for many people.
The valley has one of the shortest “breakeven horizons” in the country. It becomes cheaper to buy a house here than to rent it after an average of only 1.7 years, according to the research firm Zillow. San Jose, Calif., has the longest horizon, at 8.3 years.
But the local rental market also is quite strong, as many people who lost their homes during the recession have no other choice but to rent.
Consider the prices of the two houses on Tilden Way, off North Green Valley Parkway in Henderson.
One was bought in August for $165,000. The buyers pay $961.30 a month for their mortgage, homeowners association dues, insurance and property taxes.
A few doors down, a nearly identical house was rented in late March for $1,595 a month — 66 percent higher than what’s owed by the neighbors.
The two-story homes both are 2,352 square feet with three bathrooms and a three-car garage. The rental has four bedrooms; the owned house, five.
Still, while it might be smarter to buy, some people prefer the flexibility of renting, said Robyn Yates, co-owner of the brokerage firm Windermere Prestige Properties in Henderson. Renters can relocate more easily, they don’t pay for repairs, and they’re not burdened by a mortgage.
Plus, not everyone who wants to buy a home can get one. Having a recent foreclosure or bankruptcy on your record, a common problem in Las Vegas, can make it impossible to get a mortgage. It also can make it more expensive to rent, since landlords often require an additional deposit when leasing to people with bad credit.
For Las Vegans with clean finances, writing a monthly rent check will likely be more expensive than paying off a mortgage. And several federally backed mortgages enable buyers to purchase homes with down payments of only a few thousand dollars.
“Financially, it’s better to buy,” Yates said.
And not just in Henderson.
Krystal Sherry, a broker and property manager with Hudson Real Estate, recently sold a three-bedroom, 1,347-square-foot house off El Capitan Way in northwest Las Vegas for $78,000. The buyer pays about $663 a month for the mortgage, insurance and other costs, she said.
The owner plans to rent the house for between $950 and $1,100 a month, Sherry said. A half-mile away, an identical home was leased in late September for $1,000 a month after being on the market for just 23 days.
Near the intersection of West Patrick Lane and South Grand Canyon Drive in southwest Las Vegas, a two-story, four-bedroom, 1,779-square-foot house with a two-car garage was leased in April for $1,200 a month. An identical house in the same neighborhood would likely sell for $122,000, or $870 a month, Tsunami Properties owner Sue Naumann said.
Many apartments rent for well above $870 per month, with far less square footage.
“And they probably wouldn’t have a garage,” Naumann said.
Join the Discussion:
- Developer attains 'a real little gem' in ManhattanWest, now the Gramercy
- These five homes sold in May for how much?
- So long, Shenandoah? Wayne Newton expects to move into newly purchased home by month's end
- Rio plans zip line ride between two towers
- The Fremont Street Experience no longer free at the Golden Nugget
Will online gaming hurt brick-and-mortar casinos?