Johnson City MSA residential property loan activity down; purchase activity has highest loan origination share

Johnson City property loan originations down; purchases claiming largest share of activity

Residential property loan activity in the Johnson City MSA saw the same second straight quarterly decline as the Kingsport-Bristol MSA at the close of 2015, but in true Tri-Cities fashion there was a different vibe at play.

RealtyTrac’s Residential Property Loan Origination Report puts the Johnson City MSA Q4 decline at 4.4% on the heels of a 6.2% drop in Q3. Drivers of the decline can be seen in a drop in purchase loan origination, but that’s where the similarity ends.



While refinancing activity in Kingsport-Bristol increased in Q4 and Home Equity Lines of Credit declined, refi increased in the Johnson City MSA, and HELOC activity was down 17.7%.

Nationally, total loan originations were down 14% driven primarily by a 24% quarterly in purchase originations. It was the biggest quarterly drop in purchase origination in more than five years.

At the Johnson City MSA level total loan activity was down three quarters last year on the quarter-to-quarter metric. Year-to-date was a different story – each quarter was better than the same quarter of the previous year.

The Q4 quarterly rate of decline was less than it was in Q3 and much better than the 16% quarterly Q1 decline.  There was a stark pattern difference in the second quarter. The quarterly change in total residential loan origination jumped 44.5%; purchase activity was up 70.3%, refi increased 43.9% and HELOCs were up 26.9%.

Purchases continued claiming the largest share of loan originations in Q4. They accounted for 42.7% of all activity while refi activity accounted for 35.4%. HELOCs claimed a 21.9% share.

HELOC have declined from a three-quarter spike that began during Q2 2014 and bottomed Q1 2015.

Refi loan originations outperformed purchase activity every quarter since the beginning of the recession until Q3 last year when purchases assumed the lead.

RealtyTrac Vice President Daren Blomquist said new mortgage rules implemented at the beginning of October likely contributed to the national decrease in purchase originations, but weakness in some local economies could also be a contributing factor, most notably in the oil-producing markets.

The oil economy wasn’t a factor in Tri-Cities’ purchase origination drop. The region has seen strong increases in sales tax collections thanks to lower gasoline prices. It also saw a strong increase in job creation during the latter part of the year, and existing home sales have been at record levels since May last year, and two of the hottest home resale markets were in the Johnson City MSA. The contributing jobs factor in the Johnson City MSA was it saw steeper cuts and was on a slower recovery trajectory than the Kingsport-Bristol MSA.

Report methodology

RealtyTrac analyzed recorded mortgage and deed of trust data for single family homes, condos, town homes and multi-family properties of two to four units for this report. Each recorded mortgage or deed of trust was counted as a separate loan origination.


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