Buying a house in the Las Vegas Valley makes more financial sense than renting, according to a new report from Zillow.

Zillow looked at a variety of factors for its buying versus rent analysis. For example, the median home price for a house in the U.S currently sits at $368,720, and typical rent is about $1,951 a month.

Las Vegas homeowners reach the buy-versus-rent break-even point in about 5.2 years, compared with 5.9 years nationally for buyers who put 5 percent down. Buyers making a 20 percent down payment break even nationally in about six years, assuming a 30-year fixed-rate mortgage of just over 6 percent.

Orphe Divounguy, a senior economist, broke down how Zillow calculates their buy versus rent breakdown.

“The break-even point is essentially the tipping point when after that point it makes more financial sense to buy than to rent. To figure that out, we looked at all the costs of buying: mortgage payments, property taxes, insurance, maintenance, closing costs and the opportunity cost of the cash tied up in a down payment,” he said.

“Then we compared that to everything a renter pays: monthly rent, renter’s insurance and the return they could have earned by investing the money they didn’t put into a down payment. We ran that calculation for a typical home and a typical renter in each of the 50 largest U.S. cities, and looked at how it plays out over 30 years.”

However, the prospect of homeownership has become much bleaker since the beginning of the pandemic as the cost of a median priced house in the valley has essentially doubled. Homeownership costs, such as HOA fees, insurance, repairs and maintenance have also ballooned out of the pandemic while wage growth has largely stalled since COVID.

Divounguy said buying still makes financial sense in the valley if someone is looking at the long-term equation of homeownership.

“In Las Vegas it takes just over five years for buying to make financial sense, compared to renting,” he said. “That’s a bit shorter than the national average, and it’s the shortest break even for a major metro in the western half of the country. So looking at home ownership costs, rents, and the projected rise of both, buying pencils out faster here than in most other big cities.”

However, Divounguy said a number of factors have to be taken into account individually when someone is looking into buying a house and obtaining a mortgage.

“If you’re weighing the decision to buy or rent, you have a lot of questions to consider,” he said. “How much do I have saved up, and what can I afford on a monthly basis? What location and lifestyle am I looking for? And maybe the biggest one that many people don’t consider: How long do I plan to stay? All those factors will influence your personal math as you make what could be the biggest financial decision of your life.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.