For the second year in a row, Miami has taken the crown no city really wants: the most at-risk housing market in the world, according to UBS’ Global Real Estate Bubble Index.
The Swiss bank’s annual report looks at everything from home-price-to-income ratios to mortgage rates, construction and rental values. Score above 1.5, and you’re in official bubble territory. This year, Miami clocked in at 1.73—still firmly in the danger zone, even as its score dipped slightly from last year’s 1.79.
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So what does this mean? Miami’s real estate prices have been sprinting far ahead of reality. Over the past 15 years, the city has posted the fastest inflation-adjusted housing appreciation of any city in the UBS study. Since 2018, home prices have jumped nearly 25-percent, while local incomes only increased about 5-percent. Rents rose just 10-percent in the same period.
At first, Miami looked like the ultimate pandemic boomtown. Buyers swooped in, bidding wars broke out and homes disappeared overnight. Now the market is cooling. Median sale prices fell to $595,000 in July, down from $640,000 the year before. Listings are up longer, and many close below asking.
But waning demand isn’t the only drag. Homeowners are also being squeezed by surging insurance premiums tied to climate risks, higher condo fees and stricter rules on aging towers—fallout from the 2021 Surfside tragedy. Add it all up, and ownership has become a lot more expensive.
The biggest warning sign is that Miami’s price-to-rent ratio has blown past even the extremes of the mid-2000s housing bubble. That means speculation, not fundamentals, is propping up values.
UBS analysts don’t predict an imminent crash—Miami’s tax perks and coastal draw still lure buyers from pricier markets like New York and LA. But affordability is scraping bottom, and Florida as a whole has shed over $100 billion in housing value over the past year.
Elsewhere in the U.S., Los Angeles landed in the “elevated risk” category with a 1.11 score, while San Francisco ranked much lower at 0.28, safely in “low risk” territory. For now, though, Miami holds the dubious title as the most likely city to experience a real estate bubble.