Down at Manhattan Condominiums, one of the valley’s nicest communities (Frothing Developer should know, having developed it), it is now less expensive to own than to rent.
That’s the first time in the history of the community that it has been the case, and it’s not likely to last.
Average rent at Manhattan is $1400 per month for 2 bedroom condominiums.
Suppose you wanted to purchase, instead?
The MLS lists three 2 bedroom models for $240k. Assume:
- 15% down
6.5% mortgage, fully amortizing
Homeowner Dues: $260 per month
Property Taxes: $160 per month
Insurance/Maintenance: $40 per month
From this, we calculate:
Monthly Mortgage Payment: $1289
Monthly tax savings from interest deduction:-$295
Net Cash Cost: $1454 per month.
But out of that $1454, $197 is paydown on principal.
So, the true cost of owning a condominium under these conditions is $1454-197 = $1257. Get a 10% down mortgage, and it’s $1306.
There are plenty of places in the valley that can’t generate $1400 per month in rent. In those places, it’s not true that it’s now cheaper to buy than to rent. What’s happening here is that location quality is starting to make a difference. All of the prices are getting beaten down, but the rents are NOT getting beaten down. These Manhattan Condominiums, because of their amenities, social life, location, newness, etc… are generating twice as much rent as lots of other Las Vegas condominums and apartments.