Lender Processing Services (LPS) launched its new proprietary Home Price Index (HPI).
The HPI, developed by LPS Applied Analytics, enables the inclusion or exclusion of REO sales in valuing properties.
It 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 new Index values home prices using two methods.
First, it leverages LPS own public records real estate database that compiles data directly from the Country Recorder and Assessor offices. This database includes property characteristics and ownership transfers pertaining to 80 million owner-occupied residential parcels, covering 92% of housing activity in the country.
Second, it values home prices using a repeat sales model that considers the compositional change in the mix of houses sold over time. The changes in types of homes that sell over time do not improperly impact the HPI.
Last Marchs study of regional home price changes between 2007 and 2008, which used LPS proprietary HPI, showed that the gap between REO sales prices and the rest of the market was very slim before 2007, although is growing at an accelerated pace.
