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LPS Launches New Home Price Index

Lender Processing Services Inc., Jacksonville, Fla., believes that it has the right method for evaluating property value changes. The company will use its technology to create its proprietary Home Price Index (HPI).

This HPI, developed by LPS Applied Analytics, 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 LPS Applied Analytics HPI touts that it is unique in that it provides the option to include or exclude REO sales.

How does HPI work? HPI leverages LPS' own public records real estate database that compiles data directly from the County Recorder and Assessor offices. LPS Applied Analytics' public records real estate database includes property characteristics and ownership transfers pertaining to 80 million owner-occupied residential parcels, covering 92% of housing activity in the country. In addition, HPI uses a repeat sales model that 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.

Said Nima Nattagh, senior vice president, LPS Applied Analytics, "Our new HPI complements LPS Applied Analytics' suite of automated, desktop and field valuation products to create the ideal valuation and risk management solutions for originators, capital markets professionals and servicers."

Back in March of this year, LPS announced findings from a study of changes in regional home prices between 2007 and 2008 in the nation's top housing markets. This study, which used LPS' proprietary HPI that can include and exclude REO sales, showed that the gap between REO sales prices and the rest of the market was very slim prior to 2007, but is growing at an accelerating pace.