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Good deals for first-time homebuyers
The real estate meltdown and low interest rates have combined to put first-time homebuyers in their best position ever to take the leap into ownership.
“Good news about the housing market has been a long time coming, but there are many positives for first time buyers,” said John Madsen, chief economist at Nykredit, told Jyllands-Posten newspaper.
Since the housing market peaked in 2007, the average amount first-time buyers spend on mortgage, water, heat, electricity and insurance – known as the housing burden – fell by 4,100 kroner, while their after-tax monthly income increased by 3,800 kroner during the same period.
A family purchasing a home in today’s market uses about 35 percent of its net income on housing costs, down from a high of 47 percent during the peak in 2007. Buyers of homes on Zealand have seen the biggest improvements. There, according to Madsen, the housing burden has fallen by a third.
The calculations are based on a family of two adults and two children buying a home with a fixed-rate mortgage.
Madsen warned that although the numbers are good news for first-time buyers, they are not a panacea for a troubled housing market still facing a glut of homes and thousands of people whose home values are worth less than the amount of they owe on them.
Jens Lunde, of Copenhagen Business School, said he expects prices to continue to fall, so familes need not take the leap into home ownership until they are ready.
“There is nothing to suggest that we have reached a turning point,” said Lunde.