New Home Price Index Enables Inclusion Or Exclusion Of REO Sales

nder Processing Services Inc.'s (LPS) Applied Analytics unit has developed a Home Price Index (HPI) that measures changes in property values of residential real estate at various geographic levels, including state, metropolitan area, county and ZIP code; property types; loan types; and transaction types. The proprietary index values home prices by leveraging LPS' public records real estate database and using a repeat-sales model. The database compiles data directly from county recorder and assessor offices, and it includes property characteristics and ownership transfers pertaining to 80 million owner-occupied residential parcels, covering 92% of housing activity in the country. The repeat sales model takes into consideration the compositional change in the mix of houses sold over time. With this method, the changes in types of homes that sell over time (e.g., larger or smaller homes) do not improperly impact the HPI, LPS says. Users of the index will also have the option to include or exclude sales of bank-owned properties. In March, LPS announced findings from a [link=][u]study[/u][/link] of changes in regional home prices between 2007 and 2008 in the nation's top housing markets. This study, which used LPS' HPI, showed that the gap between REO sales prices and the rest of the market was very slim prior to 2007, but is now growing at an accelerating pace. SOUR


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