Q: With home prices going up again in Las Vegas, I’m wondering if it’s better to rent or buy right now. What do you think?
— Maria P., Las Vegas
A: As a longtime Realtor who helps people buy and sell homes for a living, I’m a bit biased on this one.
Even with local home prices rising during the past year or more, I think I can still make a convincing argument that buying a home right now in Southern Nevada makes more financial sense than renting — at least for most people.
Let’s start with the rising home prices you mentioned. According to the latest statistics from the Greater Las Vegas Association of Realtors, the median price of a single-family home sold here in April was $167,000. That was up 30.6 percent from $127,900 at the same time last year.
But keep in mind that local home prices are still a long way from where they were seven years ago, when they peaked at $315,000 in June 2006.
So, I think local home prices still have room to appreciate.
Many other experts seem to agree. One recent report from the Trulia research firm found that homes in our area are the most undervalued in the country.
Another study, issued in May by the Zillow research firm, suggested that buying a home in Southern Nevada still makes more sense than renting, assuming you live in the house for at least three years.
That report analyzed all costs of renting and buying, including upfront payments, closing costs, taxes, insurance, maintenance and monthly rent or mortgage costs, based on historic and expected increases in home and rental prices.
But all real estate is local. With attractive home prices and mortgage interest rates hovering near historically low levels, I think Southern Nevada is one of the places where buying makes good financial sense.
That financial incentive may not be as strong in cities like New York or San Francisco where home prices are much higher.
In the end, your question comes down to personal preference. If you want 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 a home.
A May 21 Las Vegas Review-Journal story said local apartment rents have stayed between $750 and $775 per month on average since late 2009, down from a peak of almost $900 in 2008. Even with historically low interest rates, that’s still less than most local mortgage payments. So, renting may cost less in the short term. But like the cost of most things, rents usually go up over time.
For homeowners with a fixed-rate mortgage, their monthly payment will be fixed for the life of the loan.
When you own your home, you can make it your own without worrying about what your landlord might say. You can also build equity and deduct the mortgage interest you pay each month on your federal income taxes. For decades, it has been one of the best ways to build long-term wealth.
Finally, there is a reason homeownership is often tied to the American dream. It strengthens communities. Studies have shown that homeowners are more likely to be involved in local issues. They tend to stay in their homes longer than renters. This stability deters crime, fosters better schools and generally makes for more secure, established and attractive neighborhoods.
If you are thinking about buying or renting a home, contact a Realtor who can help you decide what’s best for you at this time in your life.
And if you have a real estate question, email me at firstname.lastname@example.org.
Dave Tina is the 2013 president of the Greater Las Vegas Association of Realtor and has worked in the real estate industry for more than 35 years. GLVAR has more than 11,000 members. For more information, visit www.lasvegasrealtor.com.