Miami’s real estate market has found itself in the global spotlight, but not for reasons that inspire confidence among homeowners or investors. According to the latest Global Real Estate Bubble Index released by the Union Bank of Switzerland (UBS) in 2025, Miami is now considered the city with the highest real estate bubble risk in the world. This designation comes as the city’s property market shows signs of strain, with experts warning that while a crash may not be imminent, the risk is higher than anywhere else among 20 major cities worldwide.
UBS’s Bubble Index evaluates a slew of factors, including price-to-income and price-to-rent ratios, lending standards, construction activity, and real price growth. In Miami’s case, the numbers are flashing red. The city’s price-to-rent ratio has become more detached from reality than even the heady days of the 2006 U.S. housing bubble, a period many remember for its spectacular collapse. According to UBS, "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." Yet, these positives have not been enough to offset the mounting risks.
One of the starkest warnings from the UBS report is that Miami’s market is about to crash, though the process is expected to unfold gradually rather than in one sudden, dramatic event. The reasons for this vulnerability are multifaceted. For starters, Miami’s inflation-adjusted home prices have climbed faster over the past 15 years than any other city in the UBS study, outpacing even international heavyweights like Tokyo and Zurich, which follow Miami on the risk list.
But the cracks are beginning to show. Properties in Miami are sitting unsold for nearly three months on average—a full month longer than they did just a year ago. This makes Miami the worst-hit among 44 out of 50 major U.S. metros, where properties are lingering on the market longer than usual. The average sale price of a Miami home dropped to $595,000 in July 2025, down from $640,000 the previous year—a clear sign that the once red-hot market is cooling off. As a result, property prices have plummeted, sparking fears that a crash could be on the horizon.
The UBS report doesn’t just point to price drops and unsold inventory. Regulatory changes have played a significant role in shaping the current landscape. Following the tragic collapse of the Surfside condos in 2021, Florida introduced stricter regulations for older condominium buildings. These changes have forced many long-time owners to address decades of deferred maintenance, resulting in substantial costs. Combined with rising insurance premiums—driven by increased environmental risks like hurricanes and flooding—these factors have added considerable selling pressure to the market. As UBS notes, "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. 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."
From July 2024 to June 2025, Florida as a whole lost approximately $109 billion in total market value due to decreasing property values. Despite this, local property taxes for many homeowners remain stubbornly high, creating additional financial strain. It’s a perfect storm: falling values, high costs, and increased regulation—all converging in a city famous for its real estate allure.
Yet, not everyone is predicting a doomsday scenario. Former Florida Atlantic University economist Dr. Ken Johnson suggests that Miami’s real estate market is more likely to experience a soft landing than a dramatic crash. While he agrees that the city’s price-to-rent ratio is currently more extreme than during the 2006 U.S. housing bubble, he believes that the market will correct itself over the next few months. "Properties on the east side of the county, closer to the water, will remain more volatile," Dr. Johnson cautions, highlighting the added risk for those with beachfront or waterfront holdings.
Interestingly, while Miami’s struggles have made international headlines, the broader Florida housing market is showing signs of resilience. According to a recent report from Florida Realtors®, the state saw a significant uptick in new pending sales in August 2025, thanks to a drop in mortgage rates that brought buyers back into the market. Dr. Brad O’Connor, chief economist for Florida Realtors®, observed that new pending sales for single-family homes jumped 9.9% year over year, the largest increase since November of last year. Condos and townhouses, which had been sluggish, also saw a 4.9% increase in new pending sales—the first positive growth in that segment since October 2023.
Dr. O’Connor attributes this surge to falling borrowing costs, which have reignited buyer confidence and activity. "The most probable driver for this surge in new contracts is the significant drop in mortgage rates that occurred early and then again late in August," he explained. Tim Weisheyer, the 2025 Florida Realtors® President, echoed this optimism, noting continued demand for housing as the national economy stabilizes and the Federal Reserve makes strategic rate adjustments. "The Florida real estate market is indeed dynamic," Weisheyer said, emphasizing the importance of local expertise to navigate the market’s unique nuances.
Despite the positive momentum in pending sales, closed sales in August 2025 were down 3.9% for single-family homes and 6.0% for condo-townhouse units compared to the previous year. The statewide median sales price for existing single-family homes was $410,000, a slight decrease of 0.4%, while condos and townhouses saw a more noticeable 6.5% dip to $290,000. Inventory levels, however, remained stable, with a 5.3-month supply for single-family homes and a 9.3-month supply for condos and townhouses. This suggests that while demand is picking up, there’s still a healthy number of homes available, particularly in the condo market.
For Miami, the future remains uncertain. The city’s unique combination of coastal appeal, tax advantages, and regulatory challenges has created a market that’s both attractive and fraught with risk. As Dr. Johnson and other experts have noted, Miami’s market is more volatile than most, especially for properties near the water. Meanwhile, the broader Florida market appears to be stabilizing, with falling mortgage rates and renewed buyer interest offering a glimmer of hope for the months ahead.
In the end, Miami’s real estate story is one of contrasts: a city at the top of global risk rankings, yet part of a state where optimism is quietly building. For buyers, sellers, and investors, the coming months will be crucial in determining whether Miami’s bubble gently deflates—or bursts with a bang.
