LPS releases study that demonstrates the impact of foreclosure sales on home pricesMortgagePress.comLender Processing Services Inc., real estate-owned, foreclosures, REO
Lender Processing Services Inc. (LPS), a provider of integrated
technology and services to the mortgage industry, has announced the
release of its recent study that reveals the impact of foreclosure
sales, also known as real estate-owned (REO) sales, on home
Using LPS' newly developed, proprietary home price index that
can include or exclude REO sales, the company conducted a study of
changes in regional home prices between 2007 and 2008 in the
nation's top housing markets.
"While the gap between REO sales prices and the rest of the
market was very slim prior to 2007, our study shows that gap is
growing at an accelerating pace," said Nima Nattagh, Ph.D., senior
vice president, LPS Applied Analytics. "In general, markets that
experienced sharp drops in home prices in 2008 also saw deeper REO
The largest drop in prices of REO sales were observed in
Riverside County, Calif. Home prices fell by 28 percent in
Riverside County in 2008 versus 2007; however, including REO sales,
prices fell by 34 percent when compared to 2007.
"The ability to differentiate between the general trend in home
prices and REO sales is important and allows REO asset managers to
make more informed decisions about asset disposition strategies,"
The study also found that, including REO sales, home prices
declined by 29 percent during 2008 in the Phoenix market where
analysts cite significant overbuilding. When REO sales were
excluded from the analysis, though, the price decline was less
severe at 19 percent year over year.
"Using our unique home price index, LPS provides a mechanism to
separate the general trend in home prices from the trends in
foreclosure and REO sales, enabling the industry to more accurately
price REO properties and better monitor the health of the housing
market," said Nattagh.
To review specific information supporting these findings, click
For more information, visit www.lpsvcs.com.