According to a new report from UBS, the Greater Boston for-sale housing market ranks ninth globally out of the 25 metro areas in the investment firm’s Global Real Estate Bubble Index.
Boston fell in the “moderate risk” category in UBS’ analysis, the second-lowest tier, with a bubble risk score of 0.78 which is an increase from 2023, just behind Amsterdam and tied with Sydney, with Frankfurt, Munich, Tel Aviv, Hong Kong, Vancouver, Dubai, Singapore and Madrid completing the group of moderate-bubble-risk cities in descending order.
Miami ranks No. 1 on the index of cities at “high” or “elevated” risk of experiencing a housing bubble with a score of 1.79. Prices in Miami have risen by almost 50 percent since the end of 2019, 7 percent of which was in the last four quarters in real terms according to the report. Miami was followed by Tokyo in second place, Zurich in third. The “elevated risk” club included Los Angeles, Toronto and Geneva.
“Not only do the large imbalances in the housing market pose a risk for housing market in Miami, but new regulatory requirements for condominiums older than 30 years have recently led to a sharp increase in the supply of such properties,” the report states. “In addition, lower mortgage rates will likely bring significantly more existing inventory to market and potentially lead to some price erosion. Insurance costs for homeownership have risen sharply due to increasing environmental hazards.”
Markets with the lowest risk of a housing bubble included San Francisco (index score of 0.48), London, New York City, Paris, Stockholm, Warsaw, Milan and Sao Paulo.
“Real housing prices in many cities have bottomed out,” Matthias Holzhey, lead author of the study at UBS Global Wealth Management stated. “The economic outlook will likely determine whether prices once again surge or rather track sideways.”
Rising home and rent prices played the largest factor in Boston cracking the top 10 in UBS’ analysis.
According to data from The Warren Group, publisher of Banker & Tradesman, home prices have routinely hit all-time highs each month this year. In August the median single-family home price reached $630,000, a 5 percent increase year-over-year.
“Boston’s housing market has recorded a 20% price growth since 2019, outpacing both the local rental market and income growth. However, the local economy has been struggling recently, which could see a change in this trend,” the report stated.
