As any real estate agent is quick to point out, home ownership in Las Vegas becomes cheaper than renting at a faster pace than in most other cities, a new report shows.
The valley’s “breakeven horizon” — the time it takes until owning a home becomes less expensive than renting one — has shrunk to 1.5 years, according to housing-data firm Zillow.
That’s one of the fastest rates among the 35 metro areas tracked in the report. Washington, D.C., was the slowest at 4.2 years, and Riverside, Calif., was the fastest at 0.9 years, or roughly 11 months.
Just a year ago, Las Vegas’ wait time was longer. According to Zillow, the local breakeven horizon almost doubled from 2012 to 2013, going from 1.7 years to three years amid soaring property values.
The wait time hasn’t been slashed because of a drop in sales prices — local property values have been swelling at one of the fastest rates in the country the past year, thanks in large part to investors buying cheap homes, often in bulk, to turn into rentals.
However, Zillow noted that across the U.S., rental rates have been climbing and interest rates, while also on the upswing, remain historically low, making borrowing costs relatively cheap for people who want to buy a house.
Southern Nevada apartment landlords, for instance, were charging an average $812 a month in the third quarter last year, up from $794 per month a year earlier, according to Colliers International.
To calculate the breakeven horizons, Zillow said, it accounted for all possible costs linked to buying and renting, including upfront payments, closing costs, monthly rent and mortgage payments, insurance, taxes, utilities and maintenance.
It then factors in historic and forecasted home-value and rental-appreciation rates, as well as current rental prices.