Borrowers with Low Credit Scores Found it Easier to Get a Home Loan in 2014

Mortgage lending standards loosened in 2014, making it easier for borrowers with low credit scores to get a mortgage, but borrowers with low down payments saw financing options begin to tighten in the fourth quarter, according to the quarterly Zillow® Mortgage Access Index (ZMAI). Overall, it was still easier for home buyers to access credit in 2014 compared with the prior year.

The Index, which currently stands at 69.4, dropped 2.1 points from the third to the fourth quarter, but is up more than 18 points from the fourth quarter of 2013. An Index reading of 100 would indicate that credit has returned to pre-housing bubble levels.

In 2014, lenders lowered their credit score requirements for conventional loans, opening the door to a new subset of borrowers - those with scores of less than 680. Borrowers who were previously only eligible for an FHA loan due to their low credit scores are now more likely to get a less expensive conventional loan with private mortgage insurance.  At the end of 2014, it was easier for borrowers with low credit scores to get conventional loans than it had been since 2008.

However, in the fourth quarter of 2014 lenders began to offer fewer financing options to borrowers with low down payments. This move forced borrowers who may have previously been able to get a conventional mortgage with a low down payment back to FHA loans. Additionally, the rate of creative financing like second mortgages or piggyback loans, which are typically used to avoid paying mortgage insurance, fell in the quarter.

"After several years of rapidly increasing access to home loans, lenders are taking a pause," said Dr. Stan Humphries, Zillow chief economist. "With the mini-boomlet in refinance activity late last year, perhaps there was less business imperative for banks to attract new customers with looser lending. Don't expect this trend to continue though. Instead, credit access should continue its slow normalization, although it's doubtful it will ever return fully to where it was pre-bubble. The new normal likely lies somewhere between current conditions and those of the early 2000s."

Variables Used to Calculate the ZMAI	Q4 2013	Q3 2014	Q4 2014
Private Mortgage Insurance (PMI) Percentage i	43.9%	47.3%	45.7%
Second Mortgage Prevalenceii	8.6%	12.4%	12.0%
Debt-to-income ratioiii	44%	44%	44%
Credit Scoreiv	682	673	674
Non-conforming Loansv	8.6%	9.8%	9.6%
Mortgage Rate Spread (percentage points)vi	1.42	1.64	1.69
Zillow Mortgage Quotesvii	35%	53%	53%
Zillow Mortgage Access Indexviii	51.1	71.5	69.4

Home buyers want Smart Home Technology

A recent survey of independent sales associates affiliated with the Coldwell Banker®brand found that home buyers are increasingly interested in smart home technology. Now Coldwell Banker Real Estate LLC, the original San Francisco real estate start-up founded in 1906, is joining CNET and some of the biggest names in smart home innovation to share insights on the future of home technology for the country's leading real estate leaders.

Coldwell Banker Real Estate is bringing together senior executives from leading smart home brands including LG, Lutron, Nest, Sengled and Tesla for a panel titled "A Smart Look at Home Innovation." The panel will take place April 30 at the Gathering of Eagles, a real estate industry conference hosted by REAL Trends. The Coldwell Banker panel will discuss smart home trends and reveal the latest in connected home technology.

The discussion will be hosted by CNET global vice president of media sales and CNET magazine publisher Courtney Cochrane and will highlight the future of smart home technology and the increasing accessibility of these products and tools. CNET is the world's largest and most trusted online source of consumer technology news and reviews.

Panel Speakers: "A Smart Look at Home Innovation"

Partner	Spokesperson	Title
CNET (Moderator)	Courtney Cochrane	Global Vice President of Media Sales and Publisher
LG Electronics USA	John Taylor	Vice President, Public Affairs and Communications
Lutron	Matt Swatsky	Director of Product Management
Nest	Ben Bixby	General Manager of Energy Products, Nest
Sengled	Robin Foreman	Vice President of Marketing and Business Development
Tesla	Jacob Monroe	Regional Sales Manager, Mid-South

"During the 2015 International CES, it was evident that smart home technology is becoming a must-have item in homes across the country," said Sean Blankenship, chief marketing officer, Coldwell Banker Real Estate LLC. "We met with a number of leading companies in this space and are excited to bring their expertise together at the REAL Trends conference to present a deeper look at the connected home and various trends as smart technology continues to evolve based on homeowner needs."

"It's an exciting time for the smart home, and at CNET, we are seeing increased interest from consumers in the smart home as this technology becomes more accessible and easier to use," said Cochrane of CNET. "Smart home devices and apps are making homes more intelligent, efficient and safer."

Earlier this year, Coldwell Banker Real Estate released a survey uncovering what smart features home buyers are looking for when purchasing a home and how those features impact a home's sale.

The survey of more than 500 independent sales associates affiliated with the Coldwell Banker® brand found:

• Buyers want smart homes: Nearly two in three (64 percent) of the sales associates surveyed agreed that buyers today are more interested in homes with smart home features and technology than they were two to five years ago.
• Buyers want to control a home with a swipe of their phone: 62 percent are seeing more buyers interested in controlling their home technology through their smart phone or tablet now than they were two to five years ago.
• Gen X is the "smartest" home buyer generation: While almost half of sales associates are seeing tech-savvy Millennials (age 18-24) interested in homes with smart home features, even more (57 percent) identified Gen X (age 35-49) as the top buying group interested in smart home technology.                                                                                                                                                                                                                                                                                                          According to the survey, Coldwell Banker Real Estate found that home buyers are most interested in smart home technology related to security (65 percent of sales associates agree), temperature control (57 percent), safety (48 percent) and lighting (46 percent).

Coldwell Banker Real Estate also released a list of 25 smart home products and systems to watch following the brand's visit to the 2015 Consumer Electronics Show.

Pending Home Sales Increase in March for Third Consecutive Month

Pending home sales in March continued their recent momentum, rising for the third straight month and remaining at their highest level since June 2013, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, climbed 1.1 percent to 108.6 in March from an upward revision of 107.4 in February and is now 11.1 percent above March 2014 (97.7). The index has now increased year-over-year for seven consecutive months and is at its highest level since June 2013 (109.4).

Lawrence Yun, NAR chief economist, says contract signings picked up in March as more buyers than usual entered this year's competitive spring market. "Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year," he said. "While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news1. It indicates this year's activity is being driven by more long-term homeowners."  

Yun expects a gradual improvement in home sales in the months ahead but says insufficient supply and accelerating prices could be a drawback to sales reaching their full potential.

"Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer2," he said. "This in turn has pushed home prices to unhealthy levels – nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability."

The PHSI in the Northeast fell (1.5 percent) for the fourth straight month to 80.2 in March, but is still 0.6 percent above a year ago. In the Midwest the index declined 2.5 percent to 107.5 in March, but is 11.3 percent above March 2014. 

Pending home sales in the South increased 4.0 percent to an index of 126.5 in March and are 12.4 percent above last March. The index in the West rose 1.7 percent in March to 103.7, and is now 15.6 percent above a year ago.

According to NAR's March Realtors® Confidence Index (RCI), sales to investors were 15 percent of sales in the first quarter of 2015, down from 19 percent in the first quarter of 2014. All-cash sales were 26 percent of sales during the first quarter of 2015, down from 33 percent in the first quarter of 2014.

2According to March's RCI, the median days on market was 52 days, the lowest since August 2014 (53 days).

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

Home Field Advantage - Yasiel Puig, LA Dodgers outfielder

Widespread Gains in Home Prices for February According to the S&P/Case-Shiller Home Price Indices

S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released for February 2015 show that home prices continued their rise across the country over the last 12 months. More than 27 years of history for these data series is available, and can be accessed in full by going to www.homeprice.spdji.com. Additional content on the housing market can also be found on S&P Dow Jones Indices' housing blog: www.housingviews.com.

Year-over-YearBoth the 10-City and 20-City Composites saw larger year-over-year increases in February compared to January. The 10-City Composite gained 4.8% year-over-year, up from 4.3% in January. The 20-City Composite gained 5.0% year-over-year, compared to a 4.5% increase in January. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.2% annual gain in February 2015, weaker than the 4.4% increase in January 2015.

Denver and San Francisco reported the highest year-over-year gains, as prices increased by 10.0% and 9.8%, respectively, over the last 12 months. It was the first double digit increase for Denver since August 2013. Seventeen cities reported higher year-over-year price increases in the year ended February 2015 than in the year ended January 2015, with San Francisco showing the largest acceleration. Three cities -- San Diego, Las Vegas and Portland, OR -- reported that the pace of annual price increases slowed.

Month-over-MonthThe National Index rebounded in February, reporting a 0.1% change for the month. Both the 10- and 20-City Composites reported significant month-over-month increases of 0.5%, their largest increase since July 2014. Of the sixteen cities that reported increases,San Francisco and Denver led all cities in February with increases of 2.0% and 1.4%. Cleveland reported the largest drop as prices fell 1.0%. Las Vegas and Boston reported declines of -0.3% and -0.2% respectively.

Analysis"Home prices continue to rise and outpace both inflation and wage gains," said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "The S&P/Case-Shiller National Index has seen 34 consecutive months with positive year-over-year gains; all 20 cities have shown year-over-year gains every month since the end of 2012. While prices are certainly rebounding, only two cities – Denver and Dallas – have surpassed their housing boom peaks. Nationally, prices are almost 10% below the high set in July 2006. Las Vegas fell 61.7% peak to trough and has the farthest to go to set a new high; it is 41.5% below its high. If a complete recovery means new highs all around, we're not there yet.

"A better sense of where home prices are can be seen by starting in January 2000, before the housing boom accelerated, and looking at real or inflation adjusted numbers. Based on the S&P/Case-Shiller National Home Price Index, prices rose 66.8% before adjusting for inflation from January 2000 to February 2015; adjusted for inflation, this is 27.9% or a 1.7% annual rate. The highest price gain over the last 15 years was in Los Angeles with a 4.3% real annual rate; the lowest was Detroit with a -3.6% real annual rate. While nationally, prices are recovering, new construction of single family homes remains very weak despite low vacancy rates among both renters and owner-occupied homes."

Table 1 below summarizes the results for February 2015. The S&P/Case-Shiller Home Price Indices are revised for the prior 24 months, based on the receipt of additional source data.

	February 2015	February/January	January '15/December '14	1-Year
Metropolitan Area	Level	Change (%)	Change (%)	Change (%)
Atlanta	118.85	0.1%	-0.3%	5.6%
Boston	175.30	-0.2%	0.3%	5.0%
Charlotte	130.19	0.9%	0.5%	5.4%
Chicago	126.72	0.0%	-0.2%	3.4%
Cleveland	104.70	-1.0%	0.0%	2.3%
Dallas	144.43	0.7%	0.4%	8.6%
Denver	160.71	1.4%	0.2%	10.0%
Detroit	96.88	0.3%	-0.3%	3.7%
Las Vegas	137.33	-0.3%	0.2%	5.8%
Los Angeles	227.68	0.8%	-0.3%	5.8%
Miami	194.93	0.6%	0.7%	9.2%
Minneapolis	140.15	0.1%	-0.3%	3.1%
New York	175.60	0.2%	0.1%	2.5%
Phoenix	148.33	0.3%	0.0%	2.9%
Portland	172.00	0.7%	0.1%	7.1%
San Diego	206.25	0.7%	0.6%	4.7%
San Francisco	199.67	2.0%	-0.9%	9.8%
Seattle	170.33	0.9%	-0.5%	7.1%
Tampa	165.23	0.4%	-0.3%	6.9%
Washington	206.30	0.4%	-0.6%	1.4%
Composite-10	188.62	0.5%	-0.1%	4.8%
Composite-20	173.67	0.5%	-0.1%	5.0%
U.S. National	166.80	0.1%	-0.1%	4.2%
Source: S&P Dow Jones Indices and CoreLogic
Data through February 2015

Table 2 below shows a summary of the monthly changes using the seasonally adjusted (SA) and non-seasonally adjusted (NSA) data. Since its launch in early 2006, the S&P/Case-Shiller Home Price Indices have published, and the markets have followed and reported on, the non-seasonally adjusted data set used in the headline indices. For analytical purposes, S&P Dow Jones Indices publishes a seasonally adjusted data set covered in the headline indices, as well as for the 17 of 20 markets with tiered price indices and the five condo markets that are tracked.

	February/January Change (%)		January '15/December '14 Change (%)
Metropolitan Area	NSA	SA	NSA	SA
Atlanta	0.1%	1.1%	-0.3%	0.5%
Boston	-0.2%	0.7%	0.3%	1.0%
Charlotte	0.9%	1.1%	0.5%	1.0%
Chicago	0.0%	1.4%	-0.2%	1.4%
Cleveland	-1.0%	0.4%	0.0%	0.9%
Dallas	0.7%	1.1%	0.4%	1.1%
Denver	1.4%	2.2%	0.2%	1.1%
Detroit	0.3%	0.6%	-0.3%	0.9%
Las Vegas	-0.3%	0.5%	0.2%	0.4%
Los Angeles	0.8%	1.6%	-0.3%	0.3%
Miami	0.6%	1.1%	0.7%	0.9%
Minneapolis	0.1%	1.6%	-0.3%	1.1%
New York	0.2%	0.7%	0.1%	0.7%
Phoenix	0.3%	0.6%	0.0%	0.5%
Portland	0.7%	1.1%	0.1%	1.5%
San Diego	0.7%	0.8%	0.6%	1.8%
San Francisco	2.0%	3.3%	-0.9%	0.8%
Seattle	0.9%	1.4%	-0.5%	0.7%
Tampa	0.4%	1.3%	-0.3%	0.1%
Washington	0.4%	0.7%	-0.6%	0.5%
Composite-10	0.5%	0.9%	-0.1%	0.9%
Composite-20	0.5%	0.9%	-0.1%	0.9%
U.S. National	0.1%	0.4%	-0.1%	0.5%
Source: S&P Dow Jones Indices and CoreLogic
Data through February 2015