Bad Debts Trends Q1-2021 - JLR STUDY
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JLR STUDY
Bad Debts Trends
Q1-2021
www.jlr.ca
HIGHLIGHTS QUARTELY VOLUME OF PRIOR NOTICES,
REPOSSESSIONS AND NOTICES OF SALE UNDER
• The number of prior notices issued throughout JUDICIAL AUTHORITY IN QUEBEC
J
the province was 1,067 in the first quarter of 2021,
down 32% compared to the same period last year. ust over a year ago, the pandemic shut down
Despite the significant drop, the numbers are the economy. Many programs were put in place
slowly returning to normal. to address the lack of citizen income, including
a 6-month mortgage payment deferral initiative. The
• A total of 255 repossessions were published in the support measures allowed households to keep their
Quebec Land Register in the first quarter of 2021, property and avoid repossession. More recently, aid
a 21% drop relative to the same period in 2020. has been pared back and some households have
been unable to return to pre-pandemic income levels.
• Over the last 12 months, the number of prior However, in the event of financial problems, the ability
notices decreased by 47%. to sell quickly and at a good price has become easier
with the rapid growth of house prices. This in turn
• Declines in prior notices, repossessions and prevents a significant rise in property repossessions.
notices of sale by judicial authority were recorded
in all regions where the number of deeds was high
enough to calculate variation.
Evolution of the Number of Prior Notices
Evolution of the Number of Repossessions
JLR Study — Bad Debts Trends - Q1-2021 2According to data collected from the Quebec Land ECONOMIC ANALYSIS
Register by JLR, an Equifax company, 3,412 prior
Unlike the previous economic crisis, the housing market
notices were published for all types of buildings
has benefited from the pandemic and bad debts have
over the past 12 months. This number is down 47%
declined rapidly. As vaccination progresses and aid
from the same period last year, representing by far
measures are reduced, the economy is expected to
the lowest number of prior notices published for a
begin trending normally and bad debts could climb
12-month period in over 10 years. The market is slowly
to levels closer to the historical average. That said, as
returning to normal and prior notices are up slightly
long as the housing market is strong, bad debts will
but remain far below pre-pandemic numbers. The
remain low as households will be able to resell quickly
situation was particularly exceptional last spring when
if financial problems arise.
very few creditors repossessed properties. Since then,
financial institutions and other companies or indivi- In the longer term, interest rates are expected to
duals holding legal mortgages have resumed issuing rise, economic support should weaken, along with
prior notices, but as mentioned above, the strength of the interest in property, which saw a sharp increase
the real estate market is limiting the number of during the pandemic. At that point, house prices will
repossessions. stabilize, which could lead to an increase in bad debts.
However, the speed at which the housing market
In total, 1,067 prior notices were published in the returns to equilibrium will depend on several factors.
Quebec Land Registry in the first quarter of 2021
In this regard, the next federal budget will need to be
for the entire province for all types of buildings, a
monitored to see if measures limiting the potential of
decrease of 32% relative to the same period a year
housing price growth are put in place. If such measures
earlier. This decrease, although significant, is lower
are implemented, prices could stabilize more quickly,
than in the last three quarters, reflecting the slow rise
but if no action is taken, it will take several quarters
in prior notices.
for the market, which is currently benefiting sellers, to
In the first quarter of 2021, 255 repossessions were become more balanced.
recorded across the province, down 21% from the
In the meantime, the number of bad debts in 2021
first quarter of 2020. As with prior notices, significant
will be higher than in 2020, as the 2nd, 3rd and 4th
decreases relative to last year have been observed
quarters of 2020 saw historic lows due to many repos-
since the onset of the pandemic, but variances from
sessions being put on hold. However, in 2021, the
last year have been narrowing over the past two
number of prior notices, repossessions and notices of
quarters. With a rise in prior notices, repossessions
sale under judicial control should remain below histo-
should also pick up. That said, the number of repos-
rical averages given the strength of the real estate
sessions will remain well below the historical average
market almost everywhere in Quebec.
as long as prior notices remain below the norm. There
was a 45% drop over the last 12 months, totalling
876 repossessions.
DETAILS BY ADMINISTRATIVE REGION
Since the start of 2021, 219 notices of sale by judicial The details on bad debts for each of the province’s
authority were published, down 31% from the same administrative regions are presented on pages 5 and
period last year. Once more, the decline is lower 6 of this report. In the case of administrative regions,
than a few quarters ago and reflects a certain return the four-quarter comparison is preferable, since the
to normal. Finally, over the past 12 months, 740 such more deeds that are published, the lesser the impact
publications have been recorded, down 46% from of random effects.
the same period last year. This number has dropped
in all quarters compared to the previous year since Over the past 12 months, declines in prior notices
2016, when these notices began to be published in were recorded in all regions of Quebec. Some areas
the Quebec Land Register. However, the pandemic saw a more significant decline in prior notices, but it
accelerated this decline, and the number of publica- is important to remain cautious about drawing conclu-
tions has reached a new low since the start of data sions, as the various assistance measures limit the
collection. interpretation of regional differences.
JLR Study — Bad Debts Trends - Q1-2021 3DEFINITIONS FOR MORE DETAILS
You wish to get specific data for your area? Contact us
Prior notice: Notification through which a person
to get a personalized study !
informs another individual of his intent to exercise his
hypothecary right (taking in payment, sales by judicial Check the Real Estate Radar for more information on
authority, sales by the creditor and taking posses- sales, bad debts and the socio-demographic profile
sion for purposes of administration). Prior notices for of your sector.
nonpayment of immovable taxes are not included.
Consult JLR publications at this address:
Repossession: It is either a hypothecated property https://solutions.jlr.ca/publications/prime-studies
abandoned voluntarily for the benefit of its mortgagee
(lender), a giving in payment or a judgment ordering
the (forced) repossession of a property due to the
default of payment of the debt.
Notice of sale by judicial authority: This category
includes sales under judicial control and sales under
the authority of the courts. It is a notification through
which a person informs another individual that he/she
has made an act, i.e. taken the decision to exercise his/
her hypothecary right by way of sale of the immovable
by judicial authority, following the owner’s failure to
meet his/her obligations.
Publication by Joanie Fontaine,M.Sc Senior Economist
JLR, Studies on the Real Estate Market : 1-877-861-5134 4
publications@jlr.ca https://solutions.jlr.ca/publications/prime-studiesDetails by Region for the Last Four Quarters (April 2020 to March 2021) *For some regions, the number of prior notices or repossessions issued is too small to calculate a representative variation. JLR Study — Bad Debts Trends - Q1-2021 5
Details by Region for the Quarterly Period *For some regions, the number of prior notices or repossessions issued is too small to calculate a representative variation. JLR Study — Bad Debts Trends - Q1-2021 6
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