Miami has claimed the dubious title of having the highest real estate bubble risk in the world, according to a new report.
Union Bank of Switzerland (UBS) released its Global Real Estate Bubble Index, which ranked the Florida city as number one among 20 major cities worldwide.
The bubble index in real estate refers to a measure used to assess whether housing prices in a specific market are overvalued.
A housing bubble occurs when property prices rise far beyond their underlying value, often driven by investor speculation and frenzied buyer demand — only to crash when the bubble bursts.
Over the past 15 years, Miami’s inflation-adjusted home prices have climbed faster than any other city in the study. Yet the market is beginning to cool.
Homes now linger unsold for nearly three months — four weeks longer than a year ago — and high insurance costs and homeowners association fees are keeping would-be buyers on the sidelines.
It is causing properties to linger longer on the market, and those that sell are going for less money.
The UBS index considers multiple factors, including price-to-income and price-to-rent ratios, lending standards, construction activity, and real price growth.
Miami’s current price-to-rent ratio has surpassed even the extremes of the 2006 U.S. housing bubble, a stark signal that prices may be detached from reality.
A major bank has declared that Miami has the highest real estate bubble risk in the world
Pictured: Sergio Ermotti, CEO of Swiss bank UBS
This year’s edition of the UBS Bubble Index revealed that Miami had the highest bubble risk, with a score of 1.73.
The score indicates how far Miami’s housing market is from normal, according to UBS’s model, which considers anything above 1.5 to be ‘high risk’.
‘Recently, housing inventory has rebounded to near pre-pandemic levels, as slightly lower mortgage rates and significant levels of embedded equity have prompted some homeowners to list their properties,’ the report read.
‘Additionally, regulatory changes have forced many long-time owners of older condos to address decades of deferred maintenance, resulting in substantial costs.
‘Together with higher insurance premiums driven by increased environmental risks, this has further contributed to selling pressure.’
Even as affordability for buyers remains near record lows, UBS notes that owner-occupied home prices are increasingly out of step with local rents — a classic warning sign that speculation may be driving prices higher than the market fundamentals support.
While the bank predicts that price growth may turn negative in the coming months, it does not expect a sudden crash.
‘Miami’s coastal appeal and favorable tax environment continue to attract newcomers from the US West and Northeast, with real estate prices still well below those in New York and Los Angeles,’ the report read.
Condos are most likley to seethe biggest price rises. Picture are condos in South Miami Beach
Home prices have soared in the city in the last 15 years, but that growth is beginning to slow
Also in the high risk category were Tokyo (1.59) and Zurich (1.55).
Cities in the ‘elevated risk’ zone included Los Angeles (1.11), Dubai (1.09), Amsterdam (1.06), and Geneva (1.05).
The places with a ‘moderate’ bubble risk were Toronto (0.8), Sydney (0.8), Madrid (0.77), Frankfurt (0.76), Vancouver (0.76), Munich (0.64), and Singapore (0.55).
Matthias Holzhey, lead author of the study at UBS Global Wealth Management’s Chief Investment Office, explains: ‘Broad exuberance has faded, with average bubble risk in major cities falling for a third straight year.’
Miami’s strong lead will not come as a surprise to Americans keeping tabs on the housing market, as the Floridian city has been seeing real estate turmoil for quite some time now.
While 44 out of 50 major US metros are seeing properties linger on the market longer than usual, Miami is the area worst hit.
Houses in Miami are sitting unsold for nearly three months — almost four weeks longer than a year ago.
Property prices have also plummeted in Miami, sparking fears that a crash could be on the horizon.
Tokyo was another global city in the high risk zone with a bubble index score of 1.59
Zurich was the third and final city in the high risk category with a score of 1.55
Foreclosure is when a bank or lender takes back a home because the owner hasn’t made the required mortgage payments
Florida as a whole is seeing the most significant price drops in the country – with a loss of $109 billion in total market value from July 2024 to June 2025.
Price drops came after Miami became far too expensive in the aftermath of Florida’s pandemic housing boom — when Americans flocked to the Sunshine State.
During the pandemic, a high demand for housing in Miami caused prices to skyrocket, but now people are less eager to buy houses and developers have built too many new properties, prices are deflating again.
The median sale price of Miami homes was $595,000 in July, down from $640,000 the year before.