Q: Now that the tax credit for homebuyers is over, should I rent or buy a home? — Tiffany J., Las Vegas
A: I’ve heard more people ask that question since April 30, when the federal tax credit for first-time and repeat homebuyers expired.
Avid newspaper readers may have seen an article last month by the New York Times titled “In Sour Home Market, Buying Often Beats Renting.” The article discussed how renting might be preferable in some cities where housing prices are high and comparable rents are lower. On the other hand, the story points out that buying your home makes economic sense in places where home prices have dropped in recent years.
As they say, all real estate is local. With local home prices and mortgage interest rates at historically low levels today, I would argue that Southern Nevada is one of the places where you now have a good financial incentive to buy a home — even without a tax credit.
Statistics from the Greater Las Vegas Association of Realtors show that local home prices have been fairly stable for several months. Meanwhile, existing homes are selling at a near-record pace as investors and other savvy buyers recognize that bargains abound and that prices are likely to rebound in the near future.
I consulted my colleagues at the National Association of Realtors to share some key points to consider before deciding whether you should rent or own.
While the tax credit provided additional incentive to buy, the major benefits of homeownership have always been more personal than financial.
When deciding whether to rent or buy, people should consider their lifestyle. If you want the freedom to move on a month’s notice without worrying about selling your home, renting may be for you. If you don’t want to maintain landscape or deal with basic home repairs, you might want to think twice about owning your own home.
However, owning your own home is an investment in your future. There’s a reason homeownership is so often equated with the American dream. It offers the tangible and immediate benefit of shelter as well as long-term value.
Homeownership strengthens communities. Homeowners are more likely to be involved and engaged in local issues. They also stay in their homes longer than renters. This helps prevent crime, fosters a better school system and generally makes for more secure, established and attractive neighborhoods.
Financially, owning a home is one of the best ways to build long-term wealth, by building equity in your home and allowing you to deduct mortgage interest on your federal income taxes. Some homeowners even consider their home a forced savings account.
Renting may cost less in the short term. But like the cost of most things, rental rates generally increase over time, with NAR reporting increases averaging as much as 7 percent per year.
For homeowners with a fixed-rate mortgage, their monthly payment will be fixed for the life of the loan.
That being said, owning a home is a responsibility. It’s not for everyone.
If you’re thinking about buying or renting a home, contact a Realtor who can help you evaluate your options before you head into homeownership.
For more information on such topics, consult a qualified local Realtor or visit lasvegasrealtor.com.
Rick Shelton is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for 20 years. GLVAR has 12,500 members. To ask him a question, e-mail him at email@example.com. For more information, visit lasvegasrealtor.com. Questions may be edited for space and clarity.