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National Mortgage Professional
Mar 23, 2009

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 prices. 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 discounts." 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," said Nattagh. 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 here. For more information, visit
Mar 23, 2009
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